HOUSTON - One million dollars! It's a tough sum to raise in a 401K savings plan, but one of the keys to do so is start saving early since the compound interest has more time to grow.
Michael Smith, President of STA Wealth Management, advises that you take advantage of any employer match that is offered for a 401K savings plan, because if you don't, it's like throwing away free money. He, also, advises to check the fees that may be charged for your 401K and to have a balanced portfolio. "Use multiple strategies. So, a 401K is a great one. A Roth 401K is another good strategy, and have a regular taxable account and have a good balance between those."
Smith says people tend to treat saving like going to the gym because they keep putting it off until finally a few years pass by and you've not even started. He, also, warns just because you have a million saved in your 401K, that doesn't mean you have a million saved for retirement. That's because every distribution you take from you 401K is taxed since you have only deferred the taxes with you initial contribution. There are no additional 10% penalties if you withdraw after you are 59 1/2 years old.
Maybe, Dr. Evil had a 401K savings plan?