Getting started with a new career at Lockheed can be overwhelming – new roles, maybe a relocation, new staplers, HR forms, etc. Many times, the thing that gets overlooked during that initial process is the 401k. So, what are the top 5 401k mistakes I see new Lockheed Martin hires make that might get you on the right track?

401k Mistake No. 1 – Not contributing enough

One of the biggest 401k mistakes new Lockheed 401k investors make is not contributing enough to their 401k. Depending on your budget, it’s a good idea to at least contribute up to the company match. At LM, the company matches 4% if you contribute 8% of your income to the 401k (this can differ based on what class of employee you are and how long you’ve been with the company).

Depending on your retirement goals, you might have to contribute more in order to achieve what you want when you hit that “work optional” point in life. There are plenty of online tools out there (including on the Empower site) to help you with the calculations or you can work with a financial advisor to see if what you’re contributing is enough.

401k Mistake No. 2 – Not understanding the investment options

Another common mistake is not understanding the investment options available in your company plan. If you’re not sure what a “Stable Value Fund or Target Date Fund 2045” means, don’t invest all your 401k dollars into it. You can call Empower at 1-833-562-4015 and they’ll help you with your investment selections or you can work with your own financial advisor to make sure the investments you pick are right for you.

Also, don’t take advice from your colleagues without doing a little research yourself. Your coworkers might have totally different investment time frames and risk tolerances.

401k Mistake No. 3 – Not rebalancing your portfolio

A third mistake new investors make is not rebalancing their portfolio regularly. Over time, some investments in your portfolio may perform better than others, causing your portfolio to become unbalanced. For example, if the Lockheed Martin stock price were to increase rapidly, you might want to reallocate some of your 401k funds to other investments inside of your ESOP Fund.

To avoid committing this 401k mistake, rebalance your portfolio at least once a year. This involves selling investments that have performed well and buying more of those that have underperformed to bring your portfolio back into balance.

401k Mistake No. 4 Cashing out early

Think it over before you crack into that 401k nest egg.

Another mistake new investors make is cashing out their 401k early. While it may be tempting to use the funds for other purposes, cashing out your 401k before retirement age can result in hefty penalties and taxes. It also means missing out on the power of compounding interest and growth potential over time.

To avoid this mistake, avoid using your 401k early unless it’s an emergency. Consider building an emergency fund for unexpected expenses so you don’t have to dip into your retirement savings. A general rule of thumb is to keep around six months of expenses in your emergency fund but this number can vary depending on your individual financial situation.

401k Mistake No. 5 Focusing on short-term performance

Finally, new investors may make the mistake of concentrating too much on short-term investment performance. It’s important to remember that investing for retirement is a long-term strategy, and short-term market fluctuations shouldn’t dictate your investment decisions.

To avoid this mistake, LM 401k investors should focus on their long-term goals and stick to a disciplined investment strategy. Avoid making impulsive decisions based on short-term market movements and instead focus on the long-term potential of your investments.

Have you made any of the 401k mistakes above? If so – that’s ok. You aren’t alone and hopefully you can keep from making them again in the future. A financial advisor can be a valuable resource to help you walk you through some of these investment decisions before you make them to see if there might be a better option for you.

The opinions voiced in this material are for general information only. They are not intended to provide specific advice or recommendations for any individual, nor intended as tax advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

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