What mistakes do Lockheed Martin 401k participants typically make? Your 401k is most likely the most important retirement vehicle you’ll have when you retire. But why do so many people not treat it that way? Below are a few common mistakes I see with 401k participants.

• Trying to time the market. When the market takes a dip, people tend to talk about it, including the news outlets and social media. People will tend to log on to their 401k site more often when things are tough, which might make it more likely for you to want to make a change. Should I go to cash? Should I change to more conservative investments? A change in your plan is even more possible when you hear the guy at the water cooler talking about moving to cash until things “return to normal.” What is normal? Does normal mean the market is higher than when you went to cash? If you let emotion drive your decisions you could be using the very unproductive investment strategy of selling low and buying higher. Ouch.
• Investing too heavily in the company stock plan. This is another one I see a lot. You might love Lockheed and feel like you’ll stay there forever. That’s ok. But you already depend on the company on your monthly income, health insurance, life insurance, etc. Why stake a huge portion of your retirement in the Lockheed Martin stock price? We recommend not having more than 5% of your net worth wrapped up in your company stock. If you do, it might be time to rebalance to some of the other options in the plan. Read more by clicking HERE
• Asking a co-worker for investment allocation advice. This one can be painful. The best example of this I’ve seen is a new employee, fresh out of college that asks his new boss – who has been there 25 years, what he is doing in his 401k. That manager might be just a couple of years from retirement and might be more conservative, or might be sitting on a nest egg and not need any growth in his company plan. So young, new employee invests too conservatively and isn’t getting the maximum out of his company plan over the long term. Make sure your plan’s investment options and allocations align with your overall financial goals, not someone in the next office over.
• Not choosing the right contribution option. You should always consult with a tax advisor or investment professional to see which option (regular pre-tax or Roth 401k option) is the right way for you to invest in the Lockheed Martin 401k. The Roth 401k has special tax treatment for the gains in the account, but doesn’t give you the income reduction in the year you make it. For younger participants, the Roth option might be best depending on income levels. For other particpants, they might need the additional tax help of making pre-tax contributions. Basically, you should at least get help determining which option might be best.
• Not putting in up to the company match. We’re talking free money here people. No matter what you think of the market, politics, astrology, etc., make sure you’re getting the money the company adds to your plan. Lockheed Martin 401k participants get a 4% match if you put up to 8% of your salary in the plan. That’s a guaranteed 4% return even if you’re all in cash. If you can’t get to teh 8% contribution, try to trim your budget to put in all you can.

Have you made any of the mistakes above? That’s ok. For the most part, these are easily fixable going forward. The most important part is to spend the time talking with a professional for help. Your Lockheed Martin 401k is important!

If you have other questions about your 401k plan, feel free to shoot me an email at Brian@TheAeroAdvisor.com

This material is for general information only and is not intended to provide specific advice or recommendations for any individual.