How to Get Rich Slow

The best way to get rich is to get rich slow! With many companies offering 401(k) plans and easy to use investments websites, saving for retirement is a lot easier than you thought! Work for your money and then let your money work for you.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Employer
• 401(k) plan

1. SIGN UP.
   Sign up and contribute as much as possible to your company's 401(k). If you start out contributing 10%-15%, you will never see that extra money in your take home pay, thus you will never miss it! Most employers set the initial contribution rate at 3% of salary, but make sure you change that to 15%, (or 10% minimum). Putting away 15% will put you well on your way to a secure retirement. Even if you have to cut back a little later due to life circumstances, like having children...getting that early start on savings and the power of compounding interest will work magic for you over time. Start as early as you can because time is on your side!
2. GET ASSISTANCE FROM PROFESSIONALS.
   Get advice from professionals so you can actively select an investment otherwise your employer is will direct your 401(k) contribution into a long term fund for you. And remember, a weak market is good for a long term investor. Buying shares of mutual funds while prices are low will pay back big time when the market goes back up. And if your employer has a matching program, you will see your account growing even when the market is down. About 40% of companies offer investment advisory services to employees.
3. MONITOR YOUR PROGRESS.
   Meet with your companies financial counseling advisers to see if you are on track to your retirement/financial goals. They can help you make any necessary adjustments with your contributions to keep you on track, speed up your retirement date or get you back on track if you aren't. They can help you balance out your contributions throughout times when cash is tight, such as when your kids are in college, paying off large sum of debt or dealing with high medical expenses. They can help you with a game plan so you can lower your contribution temporarily, and then bump it back up again when you are financially able.
4. ROTH IRA and ROTH 401(k).
   Instead of being taxed on your savings in the future when you withdraw your money, these ROTHS are the opposite. You get no tax breaks now, but all your future withdrawals and earnings will be tax free by the time you are 60. Many companies are considering adding a ROTH 401(k) program for employees in the future. The younger you are, the more you can benefit from a ROTH 401(k) because you will get decades of tax-free growth. Starting young, contributing the maximum amount to your 401(k), living modestly and save aggressively, you can be right on track for a secure, early retirement. If you are older and make too much to qualify for a Roth IRA, you can still benefit from the Roth 401(k).
5. ROLL OVER.
   The great thing about 401(k)s is that they are portable and you have a few options as to what you do with it when you switch jobs. You can keep it with your old employer if you like their investments or you can consolidate your savings in a rollover IRA, or roll it over into your new employer's 401(k) if they accept transfers.
   Just avoid cashing it out because you could lose half your balance to taxes and penalties. If you had $50,000 and cash out before age 55 you could end up with only $32,000. It would be much smarter to leave the money in a tax-deferred retirement account.
6. SELL COMPANY STOCK.
   Many employers use their stock to match contributions, but having 50% of your earnings being tied up in company stock can be dangerous as we learned through ENRON. Plus, you never want to be tied up in mainly one stock, a successful portfolio needs diversity. There is now a Pension Protection Act which allows employees to cash out their company stock within 3 years to diversify their 401(k) investments. A company stock of 10% to 20% is normally recommended.

Tips & Warnings

• For tips on saving for retirement and knowing how much you'll have to spend once you stop spending, visit kiplinger.com/yourretirement.
• To see if savings are on track, use these tools on the resource list below
• Along with 401(k) contributions and management, it is important to save and invest outside of your 401(k) as well for added security. You may feel deprived while saving aggressively while your friends eat out and blow money on clothes, games and entertainment. But it will be worth it when you are the first to own a house or when you are 55, retired, well off and traveling, while your friends are still living paycheck to paycheck.