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Maximize Your Retirement: Essential Strategies for Optimizing Your 401(k) Plan
The benefits shared in the previous blog “Maximize Your Future: Unlocking the Power of 401(k) Contributions for a Secure Retirement” cover most if not all traditional 401(k) plans, and can be powerful tools when built into your plan. Maximizing your 401(k), and putting these various benefits to use for a long and comfortable retirement, requires a strategic approach, specific to you and your goals. There are various ways to optimize your plan, but let’s review some high level strategies:
1. Contribute Enough to Get the Full Employer Match Â
If your employer offers a matching contribution, be sure to contribute at least enough to get the full match. This is essentially free money that can significantly accelerate your retirement savings. Reviewing your employer's percentage match and maximum match is essential here.Â
Remember: There are various 401(k) plans available to your employers (or you if you are self-employed), AND it is possible your employer transitions to a different 401(k) plan provider over time. Review of your plan at a new job, and/or ongoing review of your plan with your current employer, are how you can stay on top of these key numbers.
2. Increase Contributions Gradually Â
If you’re not maxing out your 401(k) contributions, consider increasing them gradually. For instance, life’s needs may not always allow you to contribute the maximum annual limit to your 401(k). Instead, you could consider raising your contribution amount by 1% each year, whenever you receive a raise, or at another predetermined interval. Over time, these small increases can make a big difference.
3. Diversify Your Investments Â
Diversification can be key to managing risk and protecting your assets, while also optimizing upside returns. Don’t put all your eggs in one basket; spread your investments across different asset classes to balance risk and reward. A financial advisor can provide tailored advice on how to achieve the best diversification strategy for your preferences, goals, and needs.
4. Take Advantage of Catch-Up Contributions Â
As mentioned, proactively factoring in age or legislation based factors can be valuable to your retirement planning. If you’re 50 or older, take advantage of catch-up contributions to boost your retirement savings. In 2024, those aged 50 or older can contribute an additional $7,500. In 2025, your catch up increases to 50% of the standard contribution limit (during those respective years), allowing you to save even more as you approach retirement.
5. Plan for Required Minimum Distributions (RMDs)Â Â
Once you reach age 73, you’ll need to start taking mandatory required minimum distributions (RMDs) from your traditional 401(k) and aggregate retirement accounts. It’s important to plan for these withdrawals and understand how they will impact your retirement income and potential taxable situation. A financial advisor can help you create a dynamic strategy for managing your RMDs effectively, and specific to your financial and tax situation(s).
For example: If you are charitably inclined, Qualified Charitable Distributions (QCDs) eligibility begins at age 70½, and can be used to satisfy your RMD requirement, up to 105K in 2024, potentially reducing income in retirement for tax purposes.Â
‍
This is part of a three part blog series on preparing for retirement. Learn more about Unlocking Wealth: The Power of Professional Management for Your 401(k).
Meet
Brian Mills
Hi there 👋🏾, I'm Brian and I am dedicated to wealth management customized to target asset protection and growth. My experience lies in providing personalized solutions for diversifying and safeguarding portfolios to address market risks.
​Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation.  Information was obtained from sources believed to be reliable but was not verified for accuracy.  It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth, Inc. (“Savvy Wealth”) is a tech company and the parent company of Savvy Advisors, Inc, (“Savvy Advisors”).  All advisory services are offered through Savvy Advisors, Inc., an investment advisor registered with the Securities and Exchange Commission (“SEC”).  For the purposes of this blog article, Savvy Wealth and Savvy Advisors may be referred to together as “Savvy”.
Maximize Your Retirement: Essential Strategies for Optimizing Your 401(k) Plan
The benefits shared in the previous blog “Maximize Your Future: Unlocking the Power of 401(k) Contributions for a Secure Retirement” cover most if not all traditional 401(k) plans, and can be powerful tools when built into your plan. Maximizing your 401(k), and putting these various benefits to use for a long and comfortable retirement, requires a strategic approach, specific to you and your goals. There are various ways to optimize your plan, but let’s review some high level strategies:
1. Contribute Enough to Get the Full Employer Match Â
If your employer offers a matching contribution, be sure to contribute at least enough to get the full match. This is essentially free money that can significantly accelerate your retirement savings. Reviewing your employer's percentage match and maximum match is essential here.Â
Remember: There are various 401(k) plans available to your employers (or you if you are self-employed), AND it is possible your employer transitions to a different 401(k) plan provider over time. Review of your plan at a new job, and/or ongoing review of your plan with your current employer, are how you can stay on top of these key numbers.
2. Increase Contributions Gradually Â
If you’re not maxing out your 401(k) contributions, consider increasing them gradually. For instance, life’s needs may not always allow you to contribute the maximum annual limit to your 401(k). Instead, you could consider raising your contribution amount by 1% each year, whenever you receive a raise, or at another predetermined interval. Over time, these small increases can make a big difference.
3. Diversify Your Investments Â
Diversification can be key to managing risk and protecting your assets, while also optimizing upside returns. Don’t put all your eggs in one basket; spread your investments across different asset classes to balance risk and reward. A financial advisor can provide tailored advice on how to achieve the best diversification strategy for your preferences, goals, and needs.
4. Take Advantage of Catch-Up Contributions Â
As mentioned, proactively factoring in age or legislation based factors can be valuable to your retirement planning. If you’re 50 or older, take advantage of catch-up contributions to boost your retirement savings. In 2024, those aged 50 or older can contribute an additional $7,500. In 2025, your catch up increases to 50% of the standard contribution limit (during those respective years), allowing you to save even more as you approach retirement.
5. Plan for Required Minimum Distributions (RMDs)Â Â
Once you reach age 73, you’ll need to start taking mandatory required minimum distributions (RMDs) from your traditional 401(k) and aggregate retirement accounts. It’s important to plan for these withdrawals and understand how they will impact your retirement income and potential taxable situation. A financial advisor can help you create a dynamic strategy for managing your RMDs effectively, and specific to your financial and tax situation(s).
For example: If you are charitably inclined, Qualified Charitable Distributions (QCDs) eligibility begins at age 70½, and can be used to satisfy your RMD requirement, up to 105K in 2024, potentially reducing income in retirement for tax purposes.Â
‍
This is part of a three part blog series on preparing for retirement. Learn more about Unlocking Wealth: The Power of Professional Management for Your 401(k).
Meet
Brian Mills
Hi there 👋🏾, I'm Brian and I am dedicated to wealth management customized to target asset protection and growth. My experience lies in providing personalized solutions for diversifying and safeguarding portfolios to address market risks.
​Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation.  Information was obtained from sources believed to be reliable but was not verified for accuracy.  It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth, Inc. (“Savvy Wealth”) is a tech company and the parent company of Savvy Advisors, Inc, (“Savvy Advisors”).  All advisory services are offered through Savvy Advisors, Inc., an investment advisor registered with the Securities and Exchange Commission (“SEC”).  For the purposes of this blog article, Savvy Wealth and Savvy Advisors may be referred to together as “Savvy”.
