18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. But most people don't have that much saved for retirement. These fees typically come out of your total assets, so they can seriously chip away at your returns if theyre excessive. But I came to realize it wasn't a balanced fund like I had thought. Even without matching, the 401(k) can still make financial sense because of its tax benefits. In fact, that one percent difference can mean adding a decade to your retirement income. We did this by multiplying the employed population of each county by the percentage of the population that have access to employee retirement plans, and then by the percentage of employees that participate in those plans. Retirees will have a combination of different types of risk levels. Growth based portfolios are for younger investors or investors who have a much higher risk tolerance. That 3% difference may not seem like much, but it can have an absolutely massive impact over the course of a career. Updated Mar 4, 2022. It provides you with two important advantages. Good fundamental investing is all about maximizing return while minimizing risk. We indexed the final number so higher values reflect the best places for utilizing employee benefits. window.dataLayer = window.dataLayer || []; However, this number cant really tell you much. She lives and works in Cincinnati, Ohio. That extra $6,000 basically makes the calculation a no-brainer. We saw this sell-off happen in 2008-2009 where many investors sold at the absolute bottom and took 10 years just to get back to even. ), Enter your spouse total pre-tax annual income. He edits and writes articles on all things related to credit. Thank you for your answer! A 25-year-old who invests $5,000 a year with an 8% average annual return for 43 years should have approximately $1.65 million. That penalty is enough to negate the other financial benefits of a 401(k), so any money youd like to have ready access to should be saved somewhere else. Its a win-win situation. Utilizing a 401(k) is a great way to jump-start your savings. The pain of losing money is always much worse than the joy of making money. So if the plan administrator does plenty of research and other ongoing work into the structure of the investment menu in your plan, the fees will be high. When your employer sends out paychecks, the 6% (for example) of your income that youve decided to contribute to your 401(k) has already been withdrawn, before your employer has withheld anything for taxes. The real question you should be asking is how your 401(k) is performing relative to the market. 12b-1 fees: If present, these fees are factored into the funds expense ratio. Before looking at the historical returns of different stock and bond portfolio weightings, lets review various types of bonds and stocks first. Updated Mar 4, 2022. Median 401 (k) balance: $61,530. Mistake #2: Investing in a managed fund with high fees. SmartAsset does not review the ongoing performance of any Adviser, participate in the management of any users account by an Adviser or provide advice regarding specific investments. If you're struggling with debt, it might be tempting to dip into the 401k cookie jar to relieve the pressure. SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. (d=a.next()).done;)e.push(d.value)}catch(l){var f={error:l}}finally{try{d&&!d.done&&(c=a["return"])&&c.call(a)}finally{if(f)throw f.error;}}return e}function k(a,b,c){if(c||2===arguments.length)for(var d=0,e=b.length,f;d