It’s National 401(k) Day!

Happy National 401(k) Day! How will you be celebrating it?

What’s that — You’re not celebrating it? That’s understandable. After all, every day is a holiday now — In addition to Halloween and Mother’s Day, there’s National Ice Cream Day (Ben and Jerry’s gives out free cones!), national Pokemon day, and Hug a Farmer Day. You can even register your own holiday. But National 401(k) day is a day you should actually pay attention to — it’s the day you should do your Annual 401(k) Checkup.

Looking into your retirement savings sounds about as much fun as going to the dentist (which, crazy enough, experts say you’re supposed to do twice a year). Fortunately, this isn’t as painful as you think, and getting your 401(k) set up right can make a big difference in terms of having a brighter future. With a quick checkup, you could make changes that could forever improve your future.

This article is written from the perspective that your employer is offering you a plan. Fortunately, about 80% of Americans are offered some sort of plan by their company, though many small businesses don’t have one available.

Increase Your Contributions
Are you already contributing to your 401(k)? If so, that’s a great start. Only about 44% of Americans are contributing. The first thing you should check is whether you’re maxing out your employer matching. Many employers offer additional funds to employees who contribute to their account. If you’re not maxing it out, you’re leaving money on the table.

Even if you are maxing out your company match, you should probably contribute more. Try bumping up the amount of money you contribute every month — The maximum for people under 50 years old is $18,000 a year. Now, that may sound like a big chunk of your paycheck, but remember it’s pre-tax dollars, so it’s the equivalent of only about $12,000 in take home pay. So regardless of how much you decide to invest, if you took it as salary, you’d only get about two-thirds of it, and the rest would go to taxes. So try saving more and see how it feels — you can always dial it back down later. Your future self will thank you.

Optimize Your Investments
Saving money for retirement isn’t enough — you also have to make sure it’s invested properly for your needs. A few tips: Think about how comfortable you are with risk. Long-term investments are all about remaining comfortable while weathering the storm of volatile markets, and though it can feel counterintuitive, it’s oftentimes best to just stick with your investments. Still, if you’re particularly risk averse, there are ways to invest your money which are less tumultuous.
Think about your future needs. When do you plan to retire? And is your 401(k) your sole source of retirement funds, or do you have a partner who will also be contributing? Thinking ahead can make a world of difference.

Roll Over Your Old Accounts
Have you switched jobs over your career? Most of us have, particularly younger Americans, who tend to jump from company to company with high frequency. When you switch jobs, it’s easy to forget about money laying around in old 401(k) accounts. A good option may be to “roll over” those accounts into your current 401(k) provider for a number of reasons. First of all, consolidating accounts is an opportunity to save on fees. Many older retirement accounts charge surprisingly high fees. Even a 2% fee can cost you a fortune by the time you retire.

Consolidating accounts makes it easier to see all your money in one place and keep track of it. It can be easy to lose track of old accounts, particularly when your previous employers may not have your new address after you move.

At Vestwell, we believe that everyone deserves the right to receive unbiased advice and quality investment services at an affordable price. We’re proud to be at the forefront of a wave of 401(k) reform. You can learn more about our offering on our website at Vestwell.com.