seven 401(k) tips that everyone should know

Contributing to an employer-sponsored 401(k) plan is one of the best ways for workers to help ensure they don’t spend their golden years pinching pennies. According to a 2006 survey by Nationwide’s Retirement Education Institute, more than 60 percent of private-sector workers who have access to a 401(k) plan say that it’s their primary retirement vehicle.

“Today’s workers can’t rely only on the ‘three-legged stool’ of Social Security, personal savings and a defined benefit pension plan to support them during retirement,” said Karen Eisenbach, vice president of retirement plans marketing for Nationwide Financial. “Participating in a 401(k) plan is a great way for workers to take control of their retirement assets and help protect their financial futures.”

Eisenbach offers consumers the following tips on participating in and making the most of their 401(k) plans.

Getting started

Assess your current situation – To develop a sound plan for retirement, you need to know where you stand. RetirAbility Check^SM, available at www.nationwide.com/rscore, is a free and interactive online experience where you can find your personal retirement readiness score to measure how financially prepared you are for retirement.

Start contributing early – No matter what your age, the sooner you start saving for retirement the better off you’ll be. A good strategy is to gradually increase your contributions as your income increases over time.

Make it automatic – With all of the monthly demands on your budget, it can be hard to set aside money for long-term goals like retirement. One of the benefits of a 401(k) is that contributions are automatically deducted from your salary and deposited into your account. This makes it easier to save for retirement and gives you an opportunity to pay yourself first.

Making the most of your 401(k) plan

Don’t walk away from free money – Many companies offer to match employee contributions to retirement plans up to a certain percentage. Review your current contribution level to ensure you’re saving enough money to take full advantage of any company match.

Spread your risk – To help increase gains and reduce potential losses, it’s critical to diversify your portfolio with a variety of investment types. Consider using proper asset allocation – a strategy that distributes your investment over three types of assets: stocks, bonds and cash equivalents. Many retirement plans offer asset allocation options known as lifestyle or lifecycle funds. While asset allocation does help moderate investment risk, it does not guarantee a profit or protect against loss in a declining market.

Take advantage of catch-up contributions – Though it is best to get an early start, it is never too late to begin saving for retirement. The IRS has set the contribution limit for 2008 at $15,500. However, if you are at least 50 years old, you are allowed to invest an extra $5,000 in catch-up contributions to your 401(k) plan this year.

Consult an investment professional – Seek the help of an investment professional to see how you can best use your employer’s plan as part of your overall retirement planning strategy. A professional can help you assess your current financial standing, evaluate your retirement goals and develop an investment strategy to fit your needs.

Planning for retirement is an important step to secure your future. Visit the investments page at nationwide.com for information on how to prepare financially for your retirement years.

Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved. Neither the company nor its representatives give legal or tax advice. Please consult your attorney or tax adviser for answers to specific questions. Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation.

Prepared by Nationwide Insurance, which OFBF founded in 1926 and has sponsored continuously for more than 80 years.

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