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listed here. Talk to your financial advisor to learn about other options and which ones will work best for you.
Don’t put all your eggs in one basket. If you invest in more than one option, you can reduce the risk of losing money. If one of your investments decreases in value, an increase in value of another investment can help offset the loss.
The 401(k): The 401(k) is one of the easiest ways to save for retire- ment. It is a long-term savings plan instituted by an employer in which a deposit is deducted automatically from your paycheck and invested by a plan manager. It is important that you educate yourself on the investment options your 401(k) offers you and take an active part in watching how the value of the investments changes. Either your employer or your plan manager will make information available to you about how to control your investment and the funds available for you to invest in.
Two very good things about a 401(k) are:
1. Employers often contribute matching funds to your 401(k), e.g., if you deposit 1% of your salary, your employer deposits a matching amount of money up to a defined maximum. This could double your savings because you are receiving a 100% return on your contribution without factoring in interest.
2. Federal (and sometimes state) taxes on the money you deposit are deferred until you draw the money out (typically at retirement) so less is taken out of your paycheck for taxes.
Defined Benefit Plans: A defined benefit plan is a pension plan that is managed by your employer. It guarantees you a specific amount of money when you retire, which is usually paid in monthly checks for as long as you live. These plans are protected by the federal government, which ensures that you will receive the benefits even if your employer goes out of business. Some employers are beginning to change defined benefit plans to cash balance plans. For information, visit www.dol.gov.
Retirement: Are You an Ant or a Grasshopper?
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