Economic hardship is a reality for many Americans at some point during their lives. People begin investing towards their 401k plans in order to prepare for their economic futures. Unfortunately, not many are educated on the topic of 401k accounts. Here are five tips to help those investing for their retirement.

401k Account Tip Number 1: Companies That Contribute
Hewitt Associates, a human resources consulting firm, conducted a study finding that up to 30 percent of employees are not participating in 401k plans. This number may be surprising, considering that many companies offer to match 401k contributions.

Companies receive tax breaks for contributing to employees plans. Experts encourage employees to look for companies that can donate funds towards individual 401k accounts.

401k Account Tip Number 2: Escalate Contributions with Pay Raises
Typically, employees receive raises annually. Raising the percentage of their 401k plan contribution at a pace with their salary can make a big difference at retirement time.

In some cases, companies automatically raise an employees contributions at annual intervals. Unless the funds are immediately needed, employees are encouraged to continue to raise their contributions toward their 401k plan.

401k Account Tip Number 3: Forecast the Future
An employee needs to employ foresight when investing in his or her future. Obviously, the more money employees contribute now, the more money they can have when they retire. For some, this is not enticing. It is difficult for certain people to see the benefit in long-term investing.

Each person is different, so each employee must consider making a decision that best suits their lifestyle. Some may opt to have more money now from their salary rather than placing it in their 401k plan. The issue is subjective, and each employee should be encouraged to make that decision for themselves.

401k Account Tip Number 4: Maintain Investment Control
An employees 401k plan is in their control if they desire. Some people feel comfortable letting the investment run its course by relying on default options. Others enjoy the freedom of exercising their investment options.

It is important for employees to be aware of what is happening with their 401k plan. Sometimes the low rate of return on default options gives them a false sense of security; some are shocked when they realize the default options are not leaving them well prepared for their retirement. In addition, some default options are affixed to fees that can eat away at accumulated assets. Employees should be encouraged to remain active in analyzing their investment options and the finer points of their plan.

401k Account Tip Number 5: Do Not Borrow
Some people are met with economic hardship and decide to take money out of their 401k plan early. This is a mistake. When people take money out of their 401k plan prematurely, their money is heavily penalized. It is better to imagine the money does not exist until an employee is ready to retire and receive the funds at the appropriate age.

Sources
CNNMoney
Forbes
MSNBC