Financial Fitness: A 401k engine for your victory lap

Does NASCAR come to mind when you think of your 401K investment plans? When you think of NASCAR you probably think of your favorite driver, Jeff Gordon, Dale Earnhardt, Jr., or the young Erik Jones with Joe Gibbs Racing.

The drivers take the risk each weekend, behind the wheel, to reach the finish line safely at their best rate of speed. Naturally, we think of the big names and follow them hoping to see donuts in the infield and spraying their favorite beverage like a pro after the checkered flag.

However, there are many factors that get them â??first to the finish.â? The most obvious is to show up, next is to qualify, and then the driver must be on the track when the green flag drops. These are all common sense but there are DNQâ??s (Did Not Qualify) and DNSâ??s (Did Not Show). The finish line is only possible if the driver is in the race.

The qualification sessions determine the starting point in the grid for the driver.

Drivers with better qualifying performance will begin closer to the pole. The best driver will be on the pole at the start providing clean air for best performance.

Drivers that begin mid pack and further back at the start, face more turbulent air from the cars ahead, making it more difficult to gain ground to improve their standing.

According to NASCAR Sprint Cup statistics, of the 2444 races run thru mid-July 2015, 531 drivers have won from sitting on the pole position at the start. Conversely, only two drivers have won from the last place starting position in the field since 1949. One was Bobby Allison in 1969 at the Richmond Motor Speedway, and the other was Dick Rathman in 1954. The statistics seem to make sense, starting earlier is better, and starting later is much harder.

Like a NASCAR driver on the pole, the 401K is one of our best means of crossing the retirement finish line with an easy way to save and smart strategies. The plans are normally available through oneâ??s employer and typically have an automatic withdrawal into the saving program. Once in the program, there are normally investment options to choose from. These options can be confusing at first.

However, like with most successful drivers, there are crew chiefs that are available to help you see the field of options more clearly.

The investment choices will determine the potential growth opportunities.

They are one of your vehicles to financial freedom. The NASCAR Sprint Cup Stock Car design has three main components for speed: Engine Horsepower, Mechanical Traction, and Aero-grip. Similarly, the 401K also has three design benefits for performance: Investment options for horsepower, tax deferral for mechanical grip, and compounding interest over time for aero grip.

401K plans can be powerful engines of financial success. They are easy to transfer to an IRA, Individual Retirement Account, when moving from one employer to another. Like most pro drivers having a crew chief, many investors have a financial advisor to help navigate the course to the finish line on time.

Pay attention to your 401K plan and work with your financial advisor crew chief for occasional planned pit-stops to review your progress. Will you be DNS or doing donuts at the retirement checkered flag?

Jim R. Charapich is a LPL Financial Advisor with Brown Harris Wealth Management. You may reach him at 540-825-1588.
Information provided does not constitute any tax, investment or legal advice. Consult your financial, tax or legal advisor regarding your own unique situation and your companyâ??s benefits representative for rules specific to your plan. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax. Securities Offered Through LPL Financial, Member FINRA/SIPC www.finra.org, www.sipc.org