401K Reinrollment: Why Your Money May Be Put Into Target-Dated Funds

401K Reinrollment: Why Your Money May Be Put Into Target-Dated Funds

Target-dated funds are mutual funds that automatically adjust the asset mix of stocks, bonds and cash usually based on the investor’s future retirement date.  Companies have been offering these options for their employees for many years.  Some companies are now even having employees have to acknowledge if they don’t want to have their money put into target-dated funds.

In the hope of helping employees keep their money safe, companies are stepping in and trying to control where they hold their retirement funds.  Employees can continue to choose from their company’s listed fund choices, but if they don’t opt out of the target-dated funds, their money may just be moved for them.

For those people who don’t want to hassle with choices and watching their funds, this may be a good choice.  For those who are more financially savvy, the target-dated funds may not appeal to them; they may prefer to have control over their investments.

There are pros and cons to using target-dated funds based on gender, age and risk tolerance.  For more information about target-dated funds and employers utilizing them, check out a recent article by the Wall Street Journal by clicking here.

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Ask Dr. Diane: Starting Over In Life – How to Catch Up Financially

Today’s Question Is:    I am pursuing my Masters. I am divorced, 49 and just starting over in my life.  I now have a 30 year mortgage on a home (I look at it as an investment).  I really am worried about my future and how well off I will be financially.  Starting over has cost me a fortune but personally I am extremely happy, until I think about my future, and then severe anxiety.  Not to mention paying student loans.  Anyway do you have any resources for women like me?  I feel happy that I am an RN and am actually working but I want to be better off financially.

Answer:  Thanks for the question.  Having a masters can only help you in the long run.  It opens doors for you in terms of work possibilities.  You said you like being an RN.  Are you interested in teaching as well?  I like the site http://higheredjobs.com. They list teaching jobs for people with a master or doctoral degree.  I think teaching online could be a good part time way to get extra money and also set you up for a possible full time job in the future should you want to stay home, not be in nursing any more and/or not be worried about your age being a factor in finding new career opportunities.  I am almost 48 … and realistically we are not at our most marketable age.  I write about this in my book How to Reinvent Your Career.  It will be available on Amazon in about a month or so.  You can find out more here on my website and on my blog at www.drdianehamilton.wordpress.com or on Facebook.
 
Be sure you are putting the maximum amount away in your 401k or your IRA if you don’t have a 401k. After you turn 50, you can put an additional $5500/year away in your 401k to catch up if you are behind. Many people are working past the retirement age of 65.  If you have your masters and have some online teaching experience that you could be developing now, you will be able to supplement income nicely and not have to work a full 8-hour day.  The extra income could also help you pay off those student loans. 
To hear more financial advice, listen to my recent interview with Dean Voelker by clicking here.

Dr. Diane Hamilton is Interviewed by Dean Voelker

Click the date link to hear the audio file. Please be patient for the file to load in your media player.

  • 07/31/2010 – Dr. Diane Hamilton (Current Show)

    •       click this link to hear the show
    via helpmy401k.us

    Click on the above link and go about five minutes into the show to listen to Financial Talk Show Host and Author, Dean Voelker, interview Dr. Diane Hamilton about young adults, money, online learning, careers, and even Lady Gaga. . . Stay tuned until the end to hear more about Diane’s books: The Online Student’s User Manual, How to Reinvent Your Career and Ten Things The Young Adult Needs to Know to Be Financially Savvy.