What to Do With Your 401(k) If You're 10 Years From Retiring

If you're a decade away from retirement, you're at a critical point in your savings journey. You still have plenty of time for your investments to grow. But you're also reaching the point when protecting your savings becomes increasingly important.

The 401(k) moves you make in the near term could help you feel more secure about your impending retirement, even if you're not quite ready to begin that final countdown. Here are three key moves to keep on your radar.

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1. Review your investment mix

Many savers who are a decade away from retirement still have a large chunk of their money invested in stocks. That's not necessarily a bad thing. But you may want to start thinking about how you'll scale back on stocks over time.

A good bet is to gradually increase your bond allocation so your 401(k) isn't quite as subject to volatility. If you're too heavily concentrated in stocks and there's a market crash, it could mess with your retirement timeline if it happens right before you're set to wrap up your career.

2. Begin developing a withdrawal strategy

You may (or may not) be happy with your 401(k) balance, but it's important to start figuring out what it means for you. Now's a good time to think of a withdrawal strategy so you can see what annual income your savings might provide.

Many financial experts still recommend using the 4% rule for retirement plan withdrawals. You'll need to figure out what asset allocation you expect to have in retirement to see if that rule will work for you.

If you expect to have your 401(k) somewhat equally split between stocks and bonds, a 4% withdrawal rate could work. But depending on your investments and income needs, you may want to be a bit more conservative or aggressive.

3. Continue making contributions

You might assume that since retirement is getting closer, you can scale back on 401(k) contributions. But you don't want to stop funding your savings just because you're in the home stretch.

For one thing, if your employer offers matching contributions, not funding your 401(k) could mean leaving money on the table. But continuing to make contributions could also lower your tax bill in the near term while giving you a nice cushion for extra spending in retirement or unplanned expenses that may arise.

It's important to make the most of your final 10 years in the workforce. These 401(k) moves could help you approach retirement with more confidence.

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