Bankrate spoke with a number of financial experts to break down the top ways to set up your 401(k) to thrive in 2021 and beyond. This is the second of three columns outlining actions you should take.
Action 2. Grab all the free cash
"To get started on a tangible level, take a look at your company's 401(k) options," said Kevin Driscoll of Navy Federal Financial Group. "Many companies offer an incentive match, encouraging you to invest part of your paycheck into a retirement fund. Whatever they match, put that percentage into your retirement fund – it's free money."
The incentive match is one of the best parts, maybe the single best, of the 401(k) plan. And the employer match is the easiest, safest money you could ever make, offering you an immediate return for doing what you need to do anyway.
Many employers will match 50 percent of your contribution and sometimes as much as 100 percent up to a certain amount. A few employers do even better than that, although many employers do not offer a match at all.
"Ensure you have contributed enough to get the full company match," said Kirk Kinder, certified financial planner at Picket Fence Financial in Bel Air, Maryland. "There isn't any legit reason not to get the full match."
Action 3. Get more aggressive
If you have a long time until you retire, you're probably going to be better off having a portfolio that's more aggressive. That means your portfolio will likely have more stocks in it and fewer fixed-income investments such as bonds and CDs. In fact, if you're more than a decade away from retirement, it could be a huge mistake to be too conservative.
