Your 401(k) is Not a Savings Account

Ryan Guina, On Tuesday October 19, 2010, 4:46 pm EDT

One of the positive affects of the recent recession was the general shift from spending to saving. The realization that not all jobs are secure made people think twice about how much they spend, resulting in a higher savings rate than our nation has seen in years. With more attention focused on saving money, it becomes necessary to understand where you should save and how to set savings goals. For most people, there are three types of savings goals: short-term, medium-term, and retirement savings.
[See 10 Costs That Could Increase in Retirement.]
Short-term and intermediate-term savings. Short and intermediate savings are generally used for emergency funds, a down payment on a large ticket item, and similar large expenses. For most short-term and intermediate purchases, a standard savings account or CD ladder should be enough to meet your savings goals. These are great places to save for near-term expenses because you have relatively easy access to your funds and they are FDIC insured. However, the opportunity for growth is almost non-existent when compared to saving in retirement accounts.
 Full Story http://finance.yahoo.com/news/Your-401k-is-Not-a-Savings-usnews-2883556153.html?x=0
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