TODAY   |  January 23, 2014

Get the 411 on your 401K

TODAY’s financial editor Jean Chatzky downloads viewers on how to use your 401K financial savings plan to its full potential and come up with a solid action plan to earn more money for your retirement.

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This content comes from Closed Captioning that was broadcast along with this program.

>> money in my pocket

>>> "today's money" is brought to you by ing.

>> the 411 on your 401(k). if you have one, studies show there's a good chance you're not using it to its full potential. jeanne, good to see, good morning. 40% of people have one, that's the good thing but the bad thing, a lot of people leave money on the table.

>> yes, people are not maxing up.

>> you want people to rebalance. what does that mean?

>> you buy things that aren't doing well. you want to do asset relocation.

>> sometimes you're going to ask people to sell some this evenings th -- things that are doing well for them.

>> it's hard to do. if you don't, you're taking a risk. the stock market has been on a tear.

>> target date systems.

>> they imagine themselves toward your particular retirement date. most funds have them these days, most plans have them these days. if you say you're going to rebalance and never rebalance, you should be in one of these.

>> your next piece of advice sounds kind of obvious. you say you want people to increase their contribution amount, but you want them to do it by like 1% or 2%.

>> if you're at 3% and i tell to you go to 10%, it's like a crash diet , it going to hurt and you're going to fail. nudge it up by 1% or 2% now. the next time up get a raise, nudge it up again, do it again next year, eventually you'll max out.

>> we had people give us their questions online. what did you hear?

>> betsy kay is asking is there a magic number that says, yup, go retire?

>> i wish there was. it would make my job easier. use a retirement calculator . there are lots of them on the web. you put your information in, it will spit out a number you need to be saving and that's what you follow.

>> "should i roll over my 401(k) even though it's performing well"?

>> you do not have to. if you like the options in your former employer's plan, leave it alone .

>> another one, carson?

>> that's it for now.

>> we need to talk about roth .

>> 401(k)s are offering a roth option, which means you can put the money you've paid the taxes on and you doesn't have to pay taxes when you pull it out. you can split your contribution, some in traditional and some in roth .

>> what you're seeing now is mostly larger companies now are offering their employees professional financial advice . do you recommend employees take the advice of the company they work for?

>> it's not the company they work for. it's often the company that's a retirement plan provider or a third-party company. your company can't give you this advice. yeah, i think this is a great idea. research has shown people who take this advice actually do better. if you feel like you're speaking a foreign language when it comes to your money, this is a great move.

>> all right, thank you very much. keep the questions coming using the hash tag todaymoney.