Coordinating 401(k) investing strategies
Life rarely goes as planned. That's why it's always good to have an emergency fund in the bank.
Many working couples juggle two, and maybe more, 401(k) plans. These plans may have similar or wildly different investing options. One spouse may have a plan with limited options, while the other may have a full menu of mutual funds, stocks and other investments through a brokerage window.
In addition to having dissimilar plans, a couple may also contribute at different levels and get varying employer matches. Rather than focusing on each individual's portfolio, a better strategy would be to organize the couple's plans holistically. While coordinating all the investments can be challenging, the payoff is worthwhile because a coordinated asset allocation plan can reap rewards, not the least of which is keeping retirement goals on track.
"Many 401(k) plans aren't very well-diversified, so the couple needs to look at the offerings in their plan and see what asset classes are represented in each one of their plans and try to diversify as much as possible within their overall retirement investing strategy," says Frank Armstrong, founder and principal of Investor Solutions in Miami.
Read on to learn about six ideas for coordinating a couple's 401(k) retirement plans.