Take Control of Your Future: Enroll in Your Company’s 401(k) Plan
It’s never too early to start planning for retirement. Take control of your future by enrolling in your company’s 401(k) plan, which may help you better reach your retirement savings goals.
Here are a few things to consider as you enroll your plan:
Your contributions are deducted from your paycheck and go directly into your retirement account. It’s automatic and the contributions are made with pre-tax dollars, so you may not even miss the money. Use our paycheck impact tool to see how little impact contributions may have on your take-home pay.
Paycheck impact tool
Find out how little your 401(k) contributions impact your take-home pay. Use our Paycheck Impact Tool
Take the company match
Many companies will match a certain percentage of your contribution to your 401(k). That’s like getting free money just for participating in your retirement plan. Don’t miss out – consider contributing at least enough to get the full match from your company.
Get the tax benefit
With a traditional 401(k) plan, your contributions are tax-deferred, which means you don’t pay taxes on the money in your account until you take it out – usually, when you’re retired. You may be in a lower tax bracket then.
Consider going for the max
Take full advantage of the tax-deferral in a traditional 401(k) by contributing the maximum amount allowed by your company. Check with your employer for limits and details. Please keep in mind that all investing involves market risk, including the possible loss of principal.
Learn about the Roth option
Some companies offer a Roth 401(k) plan, which differs from a traditional 401(k) because it is funded with after-tax dollars. Typically, the earnings on Roth contributions will be tax free if the distribution is made at least 5 years after the first contribution and you are 59½ years old.
Enhance your buying power
If you contribute the same amount of money to your 401(k) regularly, you’re using an investment strategy called “dollar cost averaging.” This method averages out the price you pay for the investments in your account, so you’re buying more when the price is lower and less when the price is higher. Although dollar cost averaging is a good method for long-term investing without having to navigate market fluctuations, you aren't guaranteed a profit or protected from loss in a declining market.
Understand plan fees
There are fees and expenses associated with retirement plans. If you have a retirement plan with Nationwide, you can look up fees for your plan, find a comparison of investment options and review a glossary of investment terms.
Choose your investments
You decide how your money is invested inside your 401(k). Talk to your investment professional about the best investment strategy to help you reach your retirement goals.
Since 401(k)s are designed to help you save for retirement, there are stiff penalties for taking your money out early. You’ll owe income taxes on the total amount and, if you're younger than 59½, you may also owe a 10% early-withdrawal penalty. Plus, the IRS requires your employer to withhold 20% of your account value to pre-pay at least part of the taxes you’ll owe.
Annuities May Be a Smart Fit for Your Investment Plan
Are you worried about outliving your income? That’s a risk that you may be able to do something about. When you invest in an annuity, you set the stage to receive income in the future, subject to the terms, conditions and or limitations of the insurance contract.
An annuity is a long-term contract you purchase from an insurance company. It is designed to help accumulate assets to provide income for retirement. Annuities do have limitations. If early withdrawals occur penalties may apply and earnings are taxable as ordinary income and may be subject to a 10% federal tax penalty if withdrawn prior to age 59½.
How do annuities work?
An annuity is a long term investment that is issued by an insurance company designed to help protect you from the risk of outliving your income. Through annuitization, your purchase payments (what you contribute) are converted into periodic payments that can last for life.
Nationwide's annuities are flexible so you can choose one that enables you to:
- Invest a lump sum or invest over a period of time
- Start receiving payments immediately or at some later date
- Select a fixed, variable or indexed rate of return
Investing involves risk and may lose value. All guarantees and protections are subject to the claims paying ability of the issuing company, but the guarantees do not apply to any variable accounts which involve investment risk and possible loss of principal.
What type of annuity could fit into your investment plan?
Whether your needs are immediate or long-term, you can choose the type of annuity whose features work for your situation:
Variable – With a variable annuity, you choose investments and earn returns based on how those investments perform. You can choose investments that offer different levels of risk and potential growth, depending on your investment goals and tolerance for risk.
Variable annuities are sold by prospectus. Before you invest, please read the prospectus carefully and consider the investment objectives, risks, charges and expenses of the annuity and its underlying investment options before you invest. Prospectuses for products and underlying investment options contain this and other important information. To obtain prospectuses, call your investment professional or the insurance company.
Immediate – An immediate annuity is usually purchased with a lump-sum and guaranteed income starts almost immediately. Your investment converts into a guaranteed stream of income that is irrevocable once payments begin. In some situations, funds can be accessed, but some restrictions apply.
Fixed – With fixed annuities, the principal investment and earnings are both guaranteed and fixed payments are made for the term of the contract.
Fixed Indexed – This special class of annuities yields returns on contributions based on a specified equity-based index, such as the S&P 500.
A fixed indexed annuity offers returns based on the changes in a securities index, such as the S&P 500® Composite Stock Price Index. Indexed annuity contracts also offer a specified minimum which the contract value will not fall below, regardless of index performance. After a period of time, the insurance company will make payments to you under the terms of your contract.
A fixed indexed annuity is not a stock market investment and does not directly participate in any stock or equity investment.