This exercise is designed to raise your awareness about 401(k) retirement plans. Assume that the company you work for has a 401(k) retirement benefit—most companies do have these plans. Answer the following questions concerning 401(k) retirement benefits:
a. Will you enroll in the 401(k) plan as soon as you join the company? If yes, why did you decide to join right away? If no, when will you decide to enroll in the 401(k) plan?
b. What percentage of your base salary (between 1 and 15 percent) will you set aside to contribute to your 401(k) plan? What factors affect how much you will save in your 401(k) plan?
c. What percentage of your retirement contributions will you put into mutual funds that invest in stocks? What percentage of your retirement contributions will you put into mutual funds that invest in bonds?
d. What would you do if there is another financial crisis, similar to the one during 2007 to 2009, and your retirement investments in your 401(k) fund drop in value by 40 percent?