Things to Know About Investing in a 401(K)

When considering job opportunities, it is wise to look at the total compensation package including the salary, bonuses, the health care plan and the retirement plan options. If your company offers a 401(k) plan, or similar type plan, that just may be the vehicle that helps you reach your retirement destination.

Here's some key facts to remember:

• If your employer offers a 401(k) option, you might consider making annual contributions. First, and foremost, you will benefit from the discipline of saving and having contributions deducted directly from your paycheck-money you won't see or be tempted to spend. You may also benefit by saving in a tax-deferred investment account.
• Another consideration that can make a 401(k) plan even more attractive is that many employers contribute up to 3 percent of  an employees salary. When you elect not to participate in your employer's plan, not only do you you lose the amount you could have saved, you also lose the opportunity to have your company match a part of your contribution. Talk about a losing proposition!
• Another advantage of 401(k) plans is that the maximum contributions are higher than some retirement plan options. In 2011, the maximum employee contributions are $16,500 for employees under 50. For those 50 and over, you can contribute an additional $6,500 per year in your pre-tax account.
• If you leave your job, it is likely that you'll want to take your 401(k) with you. While you may not have the option of depositing the funds into a new employer's plan, it might make sense to roll over the funds into an individual retirement account. And, at the very least, you will be paying attention to your retirement account, which is something that should be done on an annual basis.

To be sure, each individual's situation is different, and it can be beneficial to discuss retirement plan options with a financial advisor to see which plans will help you achieve the retirement of your dreams. Even more important, perhaps, is having the discipline to consistently save, year after year, in spite of what financial challenges you may face throughout your lifetime. In fact, you may just get so motivated by watching your retirement account grow that you'll find it easy-or at least significantly easier- to resist the many financial temptations you could face along the way.

"Good habits, once established, are just as hard to break as bad habits." -Robert Puller