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My Retirement

June 20th, 2013 at 07:04 pm

I haven't been saving for retirement like I should have. I'm currently 36 years old and I need to get on the ball.

Well I've looked over my mail and realized that I did have a 401K with my old civilian job that I thought I had rolled it over to an IRA account. But looking at the paperwork I realized that it stated "401K" at the top of it. So I contacted my old job (which happens to have been with a bank) and called Human Resources.

I didn't want to be penalized for having kept it as a 401K plan because I literally went from one job and the next day to the other job (I worked it out that my leave would end the day before I started the military so that there wasn't a lapse in employment).

So after speaking with them I learned that I have three choices:

1. Cash it out
2. Roll it over to an IRA
3. Keep it as an inactive 401K as long as it's at least $1,000

So I chose the third option. This means that I can't contribute to it BUT I can have the dividends re-invested. So it'll eventually grow on it's own. I do need to go through it and re-do the allocations. I just looked at it and realized that leaving it alone for 19 months have left it at a very imbalanced allocation. I currently have 94% in just stock alone. I don't like that so I'll stop contributing so much to stock and re-allocate to the other funds.

But as I was talking to the banker while I was at the bank, she asked me how long I was with the company. I told her that it was almost 10 years and she stated that I would have had a pension started for me on my behalf during the first few years.

So I called human resources again and learned that yes, I do have an inactive pension. I don't need to change it or anything, I can keep it there and it'll grow inactively.

So I opted again to just leave it there. I don't want all my money in one place anyways.

But I'm glad that I've at least started on it and therefore it'll be a good stepping stone. But again I'm glad to add this to my portfolio. I just need to clean it up a bit!

9 Responses to “My Retirement”

  1. snafu Says:

    I hope you'll add both your pension benefits and 401K from that particular past employer to your Excel Spreadsheet. It's important to track growth/value of Net Worth annually. Secondly, it's far too easy to lose track of small benefits over the long term. What is that 401K invested in? What are the fees? What are the choices?

  2. creditcardfree Says:

    It is my opinion that 401K's generally have higher fees than no load mutual funds and thus you keep more of your money. Vanguard, T Rowe Price, and Fidelity are a few to look at. If it were my money, I'd roll it into an IRA, there is no tax penalty to do so.

  3. Sian Says:

    As far as I am aware, there aren't any fees but I'll call just to be sure. I have looked over the investments and just re-allocated the future contributions. I'll more than likely speak with my father to see what's best. I'll also retain the use of a personal financer at my bank where I'm stationed at to come up with a better plan.

    I'm going to start a roth IRA so that I can have it tax-free when it's time to get my contributions.

  4. Petunia 100 Says:

    All 401k plans have fees. The fees go by many different names: expense ratios, 12b-1 fees, account maintenance fees, administrative fees, etc. Most 401k plans waive loads for any load funds offered in the plan, but you pay everything else. Some 401k plans are excellent; most have excessive fees which over time take a huge bite out of your money.

    I also would roll my money into an IRA with a low-cost custodian. Vanguard, Fidelity, or T. Rowe Price for mutual funds. If you prefer a brokerage account, then any broker who will give you free trades will do fine.

    It's awesome that you have a pension! Even if it is small, it is a very nice asset. Smile

  5. My English Castle Says:

    Finding money is always nice. I agree. It's probably better to roll it into an IRA.

  6. snafu Says:

    Different places have different rules but before you accept advice or recommendations from Financial Planners or salesmen, ask directly how they are compensated. You need to know the percentage they get for the length of time you own the product recommended.

  7. PatientSaver Says:

    Yes, all 401k plans definitely have fees. You're just not aware of them, nor do you ever see them listed as line item expenses becus they're automatically deducted from your balance.

    If I were you, I would definitely roll it over to your IRA to the mutual funds of your choice. If you go with Vanguard, a well-respected company, your fees will be much lower than wherever your old employer has their 401k with. You'll have much greater control over your money than if you leave it sitting where it is.

    Take charge!

  8. rob62521 Says:

    Wow, good news on both points. Hopefully you will still start saving and investing other ways for your retirement.

  9. Sian Says:

    there is one fee on the 401K and it's less than 1%. so i'm still deciding whether to keep it there or not. after a while 1% is a lot of money. but it also depends on the fees of it somewhere else as well. ugh... decisions decisions

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