Everyone has things they want to improve about their financial lives — even those of us who are paid to write and think about money on a daily basis. To that end, the editors at DailyFinance and a few other AOL sites shared their 2013 goals with personal finance expert Jean Chatzky. Today she offers some tips to help Sarah Chazan, editor-in-chief of AOL Music, take control of her retirement plan.
“For years, I’ve blindly been putting money into a 401(k) but have neglected to learn about what I’m investing in and if that’s even the best course for my long-term goals,” Sarah says. “Since Social Security isn’t a given for my generation, it’s really up to me to make sure I’ll be financially secure when I decide to hang up my editors’ shoes.”
Here’s what Jean had to say:
Step 1: Don’t give up on Social Security just yet, but taking a more active role in planning your retirement is a necessity. The first thing I’d recommend is to take a good look at your 401(k) statement. You have information at your fingertips, and it arrives in the mail every month. You just might not know how to read it, which brings us to…
Step 2: Reach out to your HR department. “Many times, HR departments offer classes that walk people through the 401(k) and through the investment options that are available to them,” says Financial Advisor Stacy Francis. If you’re unhappy with what you’ve learned about the fees you’re paying or the funds you’re investing in, this is a good chance to get a clear picture of all your options.
Step 3: Do your own research. If you’re comparing mutual funds, Francis recommends Morningstar’s “Snapshot Report,” which tells you about fund expenses, performance, the fund manager and where the funds are invested. Try to do this type of research about once a year, because funds could change and managers could leave — and you’ll want to know when this happens.
Step 4: Make the most of your match. In the course of your research into your own 401(k), you’re going to want to find out whether or not there’s an employer match you’ve been ignoring. “I would say that’s the most important thing, because that is free money on the table,” Francis says. And if you can’t contribute the maximum annual amount to your 401(k), aim to contribute enough so you can at least grab the full match.
— With reporting by Maggie McGrath
Monday: AOL Real Estate’s Editor Wants to Pay Down His Credit Card Debt
Or, read the previous article in the series: His Financial Goal: Get Ahead of the High Cost of Higher Education