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This Tuesday, my post on rolling over your 401(k) was on Five Cent Nickel.
After it went live, I was browsing through and found an article on the Wall Street Journal's site talking about some of the disadvantages of keeping your 401(k) with your old employer.
Leaving $100,000 or More with Old Employer's 401(k)
What I found interesting was how many leave their funds over at their old employers, especially when they have a dent amount of money saved up.
In a study by human-resources consultants Hewitt Associates Inc., only 3% of departing employees with accounts of less than $1,000 left their money in their former employers' plans, while nearly half of those with balances of $100,000 or more did so.
That's partly because many companies don't allow departing employees with very small accounts to stay in their plans.
While leaving money in an old 401(k) plan is sometimes a smart move, experts say the primary reason people don't take these accounts with them when they change jobs is inertia.
There also is confusion about the options, or—to push the canine metaphors one last time—whether to walk, stay or roll over.
Simplifying your finances can help you, save time, build your finances, and focus your time on things that matter to you.
Invest for Retirement After You Paid Your Debt
Since we're on the topic of investing for retirement, if you're high-interest debt, don't invest.
You shouldn't use your 401(k) to pay off your credit cards because you'll lose the advantage of compound interest.
The only exception (there always is one!) is if your company offers a match. I'd put in enough to money in to get your company’s match.
It's basically free money and if you can get some earning compound interest through the years, you'll be in a better position when you retire.
Photo Credit: borman818