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Introduction - Pg. xii

xii Introduction "Would you tell me, please, which way I ought to walk from here?" asked Alice. "That depends a good deal on where you want to get to," said the Cat. "I don't much care where," said Alice, "so long as I get somewhere." "Then it doesn't matter which way you walk," said the Cat. --Lewis Carroll , Alice in Wonderland It used to be that after working for 25 or 30 years, we took our nice, fat pension and Social Security checks and set sail for the quiet life. Ah, the good old days. Today, things are a bit more complicated. We're retiring earlier, living longer, and living more active lives in retirement. This means we'll need more money for a longer period of time. Each day, 10,000 baby boomers (people born between 1946 and 1964) turn 50. That's a lot of people. And who's going to pay for their retirement? Who'll pay yours or your kids'? The one sure bet is that it won't be the government. Add to this the fact that many companies are rethinking their commitment to their employees when it comes to retirement. Many have already replaced their traditional pension plans with shared ar- rangements. These shared arrangements call for both workplace and worker to make a commitment to the future. The most common shared arrangement is called a 401(k) plan. 401(k)s are a means to an end. They are a way to get you somewhere. And if used correctly, they can be your most powerful weapon in the battle against not having enough money to live on down the road. But how much should you be saving in your 401(k)? And how should you invest? The only way you can answer these two questions is to figure out how much your retirement will cost, based upon when you want to retire. These are important questions that must be answered if you are ever to enjoy the good life. Most people approach their financial future like Alice--they have no idea where they are headed. We're all going to retire someday. We are all headed somewhere, but like Alice, we just don't know where. Fortunately, with a little bit of knowledge you can have what you want, when you want it. All you need is a plan to get it. And we will help you build that plan. What you know (and don't know) and how you use your 401(k) will say volumes about your ability to retire someday. So, assuming you don't want to work forever, come along and learn all about 401(k)s. Ten, fifteen, or twenty years from now, you'll be glad you did. Welcome to The Complete Idiot's Guide to 401(k) Plans, Second Edition This Complete Idiot's Guide will open your eyes to the world of 401(k)s and planning for retirement. You'll learn all about the different types of pension and savings plans and how to use them to save for retirement and save money on taxes at the same time. More important, you'll learn how to use your 401(k) to reach your retirement and other personal financial goals.