401(k) payroll contribution %
Hi Ms. Savage, I’m sixty three and a half and considering retirement in the next two years. My mortgage is paid and I currently have no debt other than monthly living expenses. I currently contribute 25% of my pay to my 401(k) and my employer matches up to 5%. I have seen my 401(k) balance decrease significantly with the economy and market being what it is. I’m considering decreasing my contribution to 5% so I continue to receive my employer’s match. The difference of 20% that I will receive in my paycheck I would like to put into something with little risk. I would appreciate your view on this and what you suggest would be a good investment for someone nearing retirement. Thank you.
Terry Says
I think that’s a great idea at this stage of life! Open a money market deposit account at your bank — even though the rates are very low. Assuming you have no other cash, this is a good time to build up a savings reserve –even though you earn very little interest right now compared to inflation.
If you had a longer time horizon, it would be a good idea to keep investing in the market. But since you already have money at work there — and it will take a while to recover– having cash on the sidelines will help keep you from panicking and selling out at the worst time.
