What is a 401k and Should I Enroll?

When asked to participate in the company’s 401k, were you thinking, “I can’t even can’t even run a 5k!” Thankfully, a 401k is not a race. But what is a 401k? Let’s make it simple. You probably have a checking and savings account, right? “Checking” to write checks and pay bills, a “savings” or “investment” account to save. Hopefully you have one of those and are using it. Well, a 401k is just a “retirement savings” account that both you and your employer can contribute to. It’s as simple as that . . . an account used to save for retirement. Not for when your pet gets old and needs bionic legs!

We can often think about retirement as a vague idea that we know we should care about, but if we’re honest, it’s in the “I’ll worry about that later” part of our brain. Things just seem to get lost in there! Few of us have really thought through our plan to make sure we’re ready for it when we do retire. In reality, retirement is your same life, with the same joys and problems. You just don’t go to work anymore. So why care about retirement? Well, whether your dream for retirement is to play golf each day, travel the world, serve at your local homeless shelter, spend time with grand-kids in Texas, or sit at home watching world championship dog competitions… you’ll still need money to pay bills. Think about that for a second. The bills just keep coming, but the money stops coming. Scary thought, right? And don’t stop there. You won’t want to just barely scrape by and be able to pay the bills. You’ll want to do the things that are most important to you, and maybe even leave some money behind for your kids and grand-kids? That’s going to take a lot of money saved up, like a mountain of cash or something. So what should you do? Enroll in your 401k today! Money will be put aside each paycheck and invested, and will grow until you need it!

Does the idea of investing your retirement savings sound scary and risky? The truth is that not investing your retirement savings is the riskiest thing you can do. Even if you saved for retirement and put it in a savings account . . . do you think a dollar today will be worth a dollar when you retire? Definitely not. If you don’t have a plan, and don’t invest your savings, you’ll probably run out of money during retirement. That sounds pretty risky to me. Don’t put this off any longer. Talk to your HR manager and ask how you can enroll in your 401k plan today!