Don’t Ignore Your 401(k)!

One of the beautiful things about a 401(k) is how easy it is to set up and maintain.  For the majority of you with a 401(k) the setup process probably went something like this: your HR department handed you a bunch of forms to fill out and one of those was probably a 401(k) contribution election form.  You probably picked the standard contribution percentage and checked a box next to a target date fund based on your retirement year.  Easy peasy!

It’s easy to completely forget about your 401(k), but it’s a good idea to take a look at it at least annually because a lot of changes can happen in a year!  Your investment objective or risk tolerance may have changed and it’s important to check in on the account and your investments from time to time.  Here are some things to think about when you look at your 401(k):

Think long term

When you check the returns on your investments, make sure to look more than 1 year in the past.  Unless you’ve been living under a rock, you know that the stock market has been (to put it lightly) volatile lately.  If you’re only looking 1 or 3 months back, of course your returns are going to look crazy!  Take a deep breath, this does not represent your account.  As long as you have a long term (5-10 year) time horizon, there’s nothing to worry about in the short term.

Max out

Your company will likely provide a partial match to your 401(k) contributions.  Sometimes, an employer will add 50% of what you contribute, up to 6% of your pay.  Other employers will match dollar for dollar up to 3% of your total salary.  Keep in mind that employer matching varies across companies.  It’s up to you to make the most of your employer matching while keeping the contribution limit in mind (it’s $19,500 in 2021).

Ask for help

Many 401(k) companies have planning tools on their websites and can assist you in getting an investment strategy together.  They’ll also likely have a glossary of terms that I encourage you to browse to learn more about your investments.  If you still need help, ask a financial advisor.  Many advisors (*wink* me) offer a complimentary consultation.  This can be a great opportunity to ask an advisor to take a look at your 401(k) investments.

This material was created for education and informational purposes only and is not intended as ERISA, tax, legal or investment advice.  If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this education material.