How Should I Be Allocating My 401(k)?

Can you believe it? Here we are in the last week of May with summer peeking out from right around the corner. Over the last few months of client meetings, I have noticed a consistent theme among pre-retirees—how should I allocate my 401(k)?
Most companies today have done away with pension plans and replaced them with the 401(k) qualified retirement plan. While there are many benefits of the 401(k), one item they all seem to be lacking is the offering of qualified advice.

A typical 401(k) plan has a match where the employer will offer a certain percent match of every dollar a person puts in up to a maximum percent or amount. The funds within the employer-established plan vary widely but typically include a mix of equity, debt and government mutual funds and maybe a few ETFs. We usually see about fifteen to thirty different funds available to choose from. Many employers restrict the withdrawal of funds from these plans until age 59 and ½. That means during the hardest working times of our lives—when we typically have the most going on—our retirement is getting the least attention.
How do you choose between an American Funds Large Cap ETF and a Vanguard Target Date Fund? Of the few employers that offer advisory services within their plans, most come with an additional fee, and even then, it doesn’t mean the advice is tailored to that individual. In an effort to continually provide value to our clients, we are able to offer recommendations to our clients even if their account is still with their employer. Rather than listening to the latest success story from around the water cooler or the doomsday prediction from the money market guy, call your advisor and we will be happy to review your 401(k) with you and help you understand the risk vs reward of your investment.

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