Shouid I contribute to a Safe Harbor 401K plan when I start my first job out of college?
I'm trying to learn about how to start saving but I'm unsure how this plan works. How is it different from a regular 401K and will it help me save on taxes?
Terry Says
It is a regular 40l(k) plan. But many employers recognize that people simply don't know what funds to choose. So they "default" you into a "safe harbor' mutual fund -- likely a target date fund -- designed to be aggressive when you are younger and grow more conservative as you reach retirement age. By all means, contribute as much as you possibly can. And if you switch jobs, roll it to an IRA where it can keep growing -- or leave it with your former employer in the plan. Time is more valuable than money at this stage. And don't ever get scared out by a market decline. That's an opportunity for your regular contributions to buy shares at lower prices. Then, in the future, you will have more shares growing for you in the long run.
