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8 common mistakes people make with their 401(k) plan

8 common mistakes people make with their 401(k) plan

A 401(k) is a phenomenally successful retirement plan offered by an employer that encourages employees to save a specific amount of their income from every paycheck. The employee can choose the amount to be saved, and the employer matches the amount. These amounts accumulate in the employee 401(k) retirement account. An employee can invest the amount, take a loan against it, or withdraw it before retirement—against conditions and penalties.

Advantages of 401(k) for employees
401(k) plans allow employees to have financial security during retirement without worrying about managing their post-retirement life without income. They can now set a portion of their income to secure their post-retirement financial needs. The plan also offers tax savings, opportunities to invest the money accumulated in their 401(k) plan, and, under specific conditions, take a loan in case of a financial emergency.

Common mistakes that can devalue a 401(k)
If an employee uses the various provisions and benefits of 401(k) in terms of contributions and investment, it can be a solid fund with good savings, returns, and tax benefits.
However, if an employee does not use the opportunity well, it can result in wasted savings. These mistakes happen mainly because the employee may lack information about the different investment options, the loss, the penalties associated with loans, or the disadvantages associated with early savings withdrawal. These mistakes can be avoided, and one can get the full benefit of 401(k) plans to secure their retirement.

Being unaware of the scope, rules, and benefits of 401(k)
While the fundamental benefit is to encourage savings and secure some financial stability post-retirement, the 401(k) has become popular as it allows employees to invest the savings in funds and earn additional money. Many take loans and withdraw their money early, much before retirement, unaware of penalties and loss of interest. The IRS has drawn up many rules, criteria, and limitations to ensure that the 401(k) serves its purpose for someone no longer working.

Not contributing to savings
The 401(k) contribution is usually automatically deducted from the paycheck. However, in some traditional 401(k) plans, employees can alter their contribution rate or opt-out anytime. This can result in reduced savings. When the savings are not significant or not done regularly, it can result in significantly reduced savings at retirement.

Being unaware of the maximum contribution limit
The maximum contribution limits change yearly. They are currently $23,000 and have increased by about $500 from the previous year. Knowing the maximum limits allows one to contribute more and also invest more. Investing between 6% and 10% of one’s monthly income in one’s 401(K) plan is ideal, giving one significant and solid savings at retirement.

Not knowing the different plans offered
While traditional 401(k) is the most common and well-known plan, an employer can also offer Roth Plans. One can contribute to both plans, but the contribution should be within the annual contribution limit set by the IRS.

Not investing and losing out on compound interest
When one starts investing in 401(k) early, one earns compound interest on the principal and any accumulated interest. While the compounding interest may look low in the early stage, as one continues, the total compound interest earned over many years or decades can be significant.

Not continuing 401(k) while changing jobs
When one switches jobs, one can roll over the existing 401(k) to the new employer without attracting
taxes or penalties. Talk to the new employer’s 401(k) administrator about transferring their new 401(k) plan so one can continue saving and investing without a break.

Not strategizing one’s investment
One can maximize their 401(k) investment returns by paying attention to the different investment options, years of service, risk, and the amount one wants as a return when one retires. The common investment options offered in 401(k)s are:

  • Mutual funds
  • Exchange Traded Funds
  • Conservative Funds
  • Value Funds
  • Balanced Funds
  • Aggressive Growth Funds
  • Specialized Funds
  • Target-Date Funds

Without awareness about how and how much to invest, one may lose out on opportunities to earn additional income from one’s 401(k) plan. One will pay fees for one’s investments; hence, it should be worth it and give one adequate returns. Another rule is to avoid funds that charge very high fees.
Hiring a professional investment consultant may be advisable if one has little or no knowledge about investing. The expert will advise diversifying one’s investments and calculating one’s future salary based on promotions, wage raises, and bonuses. They will also help one achieve a target amount one wants to make from one’s 401(k) at retirement. One must stay committed to the plan and continue to save and increase one’s contributions as one climbs up the ladder and gets a raise in one’s salary.

Overinvesting in employer’s stock
Most experts agree that diversifying the investment guarantees better returns and reduces fees and the risk of overinvesting in a single company. In a loss, one’s savings could get wiped out. Many employees also prefer to invest in their company stocks. While companies regularly give employees stock options as a benefit, if one wants to buy them through one’s 401(k), one should use only up to 20% of one’s savings and the rest for other investment options.

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5 mistakes to avoid before bed for better sleep

Have you ever woken up feeling tired and lethargic despite sleeping for seven to eight hours at night? It could be due to poor sleep quality. Disturbed sleep influences the rest of your day: how you think, your performance at work, and other tasks. The causes of poor sleep are many, including a faulty mattress, distractions in your room, or a heavy dinner. Avoiding the following mistakes before bed can help you sleep better: Staring at a screen Using gadgets close to bedtime is probably the most common mistake in the digital age. The blue light emitted from screens affects the production of a specific hormone responsible for inducing sleep and regulating the circadian rhythm. Apart from the blue light emission, the television or mobile phone sound can be a distraction that keeps you awake. High noise levels create lots of mental stimulation and disturbance, preventing the brain from shutting down. Hence, it is advisable to avoid using phones, televisions, and laptops for at least an hour before bed. Exercising Exercise is among the best solutions for good health, but you must do it at the right time. Physical activity late in the evening or at night hampers sleep patterns by increasing stress and raising body temperature.
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Foods to be avoided by diabetes patients

Food gets broken down into glucose by the body to release energy for its functioning. Most meal plans combine fats, proteins, sugars, and other essential carbohydrates vital for healthy growth and organ function. However, people with diabetes should be careful about seemingly healthy foods as it can trigger a spike in their blood glucose levels. Here are different foods that are bad for diabetes and should not be eaten regularly: Various foods that are bad for diabetes patients Fruit juices and other drinks Sugar consumption via beverages can spike insulin levels drastically. Did you know that lots of seemingly healthy store-bought fruit smoothies, sports drinks, bottled juices, and sodas can spike blood sugar levels too? Also, natural fruit juices are not necessarily a healthy option as they are high in fructose. Aside from this, cola, iced tea, lemonade, and other flavored beverages are excessively high in carbs, sugar, and fructose. Their regular consumption can trigger insulin resistance, forcing healthy cells to reject insulin and extract glucose for energy. Another crucial thing to remember is to avoid any type of spirit if you have diabetes. These contain empty calories and can worsen the condition significantly. Cereals, yogurt, and dried fruits Daily breakfast cereals are fortified with essential vitamins and nutrients that make up for a wholesome meal.
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Strengthening the lungs can help one avoid respiratory issues and diseases. Even when diagnosed with a lung-related illness, making significant changes to the lifestyle and food regimen can help people manage the symptoms and restore lung function. However, it is equally important to avoid the food items that damage these organs and cause issues like inflammation, sneezing, and wheezing. Here are a few foods to avoid to improve lung health: Salty food Foods with excessive salt should be avoided as their long-term consumption can have severe consequences on the overall health. Excess sodium in such food items can enlarge the muscles of the heart, cause headaches, increase blood pressure, and lead to a wide range of kidney-related issues like stones. Such foods can also have a negative effect on the health of the lungs and have been linked to an increased risk of bronchitis. Additionally, too much salt in meals can also worsen the symptoms of respiratory issues like asthma. This is because sodium can cause fluid retention, leading to shortness of breath in those with lung diseases. To reduce its intake, one should start by limiting salt in their meals and instead add more herbs and spices as seasoning.
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Migraine headaches are a devitalizing experience. It completely saps the person of energy and prevents them from being productive during these episodes. There is usually a build-up to a migraine attack which is different for every individual. The phase before the actual migraine attack is known as the aura, and people may report seeing flashes of light or experiencing a tingling sensation. Below are some options for treating migraine headaches: Treatment options Nurtec Nurtec is a treatment option that helps relieve some symptoms of migraines. It reduces the severity of headaches and sensitivity to light. Nurtec is usually taken on alternate days to prevent migraines and other pain associated with the condition. Ubrelvy Ubrelvy, a fast pain-relief, is a treatment option that blocks calcitonin gene-related peptide (CGRP) in the body. CGRP is associated with migraine attacks, and suppressing it goes a long way in treating the condition. Excedrin This pain reliever does not just treat migraine headaches but also pain in other parts of the body. Excedrin provides fast pain relief to the patient. Qulipta Qulipta is a treatment option that helps prevent migraines over a more extended period. However, medical professionals do not recommend this treatment option to people suffering from kidney or liver problems.
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A pet’s fur can be the perfect breeding ground for fleas and ticks. These pests can annoy your pet throughout the day. Such parasites can also cause several health problems like Lyme disease and skin infections in dogs and humans. Fortunately, pet care experts have developed several ways to rid these critters of your furry friend. Here are four handy tips that help with managing flea and tick infestations in dogs: Initiate a treatment plan If your pet develops a pest infestation, the first and foremost thing to do is get them on a treatment plan. Here are a few prescriptions that can be helpful: Bravecto® (Fluralaner) This prescription for dogs comes in two types: a chewable option or a topical solution. Bravecto is approved by the FDA and works on dogs and puppies at least six months of age who weigh at least 4.4 pounds. If you pick the chewable option for your pet, it must be given with their food once a month. Alternately, the topical solution must be applied once every 12 weeks. You can also check out special offers on Bravecto’s website for attractive discounts on their products. Simparica Another recommended treatment for fleas and ticks is the FDA-approved chewable from Simparica.

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