Personal Finance and Investing

1) If you don't properly rollover the money to an IRA (as multiple people have mentioned)

2) paying "management fees" (often 1-2% of your assets each year to have someone at the IRA company provide professional management

3) Getting involved with Annuities

1) To avoid this, go to the company you pick and have them handle the paperwork to rollover the fund. They will insure you have done everything right. Pick a big company first - you can always move some or all later elsewhere (I have made 5 moves of my money) and big companies are "big pockets", i.e. they must be very careful with newbies or a good lawyer will make them squeal. Some big places will give you bonuses up to a couple of thousand dollars depending on how much you move into them. Ask, and sit down with someone local at the company you are thinking about and ask lots of questions. Not a good idea for your first company to be online as you should be talking face to face and have the opportunity to sit down with them to do newbie explanations and they often have free local talks on investing for newbies.

2) If you can't manage your own money i.e. pick your own stocks, bonds, ETFs, Mutual Funds, or just find a good "Target Date Fund", then either wait to move your money and pay a "fiduciary" for ideas on what to pick but go elsewhere to implement it or pay the fees until you learn then move your money or tell the company you want to self-manage. One way to save is to have the company set up two IRAs - one they manage with the money you don't need for 5-10 years and the other for the cash you want to withdraw which you self-manage by keeping it in money-market funds (cash). Then you won't be paying them their fee to manage your cash.

3) I'm not saying annuities are bad but there are a lot of "less then interested in your interest" people who push them because they get big fees. Keep away from them until you become well versed about their limitations and issues.

Online, you can find lots of sites that allow you to put in your 401K numbers, your age, your expected lifespan, other income expected like S.S., your important expenses, the inflation you expect, etc and the software will tell you how much you can safely withdraw to avoid running out.

Also, talk to friends who have already retired and see how they handled it. Read up a lot about retirement so you know the kinds of questions to ask.

One big thing you should learn quickly - I didn't. ROTH IRAs can be great. When most people retire, their income drops, especially before social security kicks in. That is a great time to move chunks of money from your IRA to a ROTH. Once a ROTH has been open for 5 years, all the money it earns plus all the money you put in can be removed without being taxed. The downside is that the money you move is taxed when you move it from IRA to ROTH IRA. However, if your income is low, your taxes are low or zilch and so the moved money is not taxed or taxed little because your income is so small. When I retired, we lived on saved money for a couple of years before I could get SS and before withdrawing from my IRA. I thought it was so neat that I had to pay no taxes. But I could have moved thousands from my IRA to a ROTH and paid no taxes or tens of thousands and paid little in taxes. Note,whatever you do - even if you decide to wait before doing anything, open a ROTH IRA somewhere and minimally fund it ASAP. Above I mentioned that 5 year rule on ROTHS. It doesn't matter if it has $100 in it for those 5 years then you suddenly put in $500,000. It meets the 5 year rule as I understand it.

Note, I'm just another poster who has successfully managed to live comfortably on my retirement by careful investing and taking in lots of info from online experts, local management company experts, friends who are fiduciaries or have a lot of knowledge about finances, going to free classes and asking lots of questions. I never paid much attention to my 401K but with an IRA, I'm very careful and self manage with the big companies, keeping away from anyone that promises better returns than the big guys' experts say is a "good return".