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Investing & Retirement

Unsure of Your 401(k)? Here's How to Get It on Track

6 Minute Read

For more than a month, we’ve done a lot of digging into 401(k)s and the hurdles many workers face as they try to use their workplace plans to build a secure retirement nest egg. We’ve walked you through a typical 401(k) enrollment packet, talked about how to choose good mutual funds for your 401(k), and discussed how you can diversify your funds so your 401(k) benefits from the stock market’s ups and downs.

Along the way, we came across lots of statistics like these that show just how confusing those topics can be:

  • One-third of 401(k) investors don’t know how their 401(k) money is currently invested.
  • Nearly half feel they don’t know what their best 401(k) investment options are.
  • One-third are stressed out about how to correctly allocate their 401(k) dollars.

After reviewing all that data, we decided to put a face on those numbers by talking to real 401(k) investors who are figuring out how to overcome those 401(k) hurdles so they can successfully invest for retirement. In those discussions, we found out two things that are certain: First, the struggle is real, and second, with experience and the right advice, you can become a confident and successful 401(k) investor.

Frustration Leads Inexperienced Investors to Despair

For too many workers, all they know about their 401(k) is that they need one to provide some income when they retire. Veronica from Panama City, FL, said she and her husband fall into this camp. They are two of the millions of Americans who have less than $10,000 saved for retirement, but they don’t know where to start to improve their situation.

“I know that the hindrance is my lack of knowledge and guidance in the matter, “ Veronica said. “The feeling of confusion and frustration leads to despair, knowing we won’t be able to survive retirement if we don’t figure it out soon.”

When it comes to selecting mutual funds for her retirement plan, Veronica said she didn’t know she had a say-so. “My employer selected the funds, “ she explained. “I had nothing to do with it. They were automatic. I thought that’s how they worked.”

While many employers have started automatically enrolling their employees into their 401(k) plans, most offer at least a few types of investments employees can choose from if they wish. Veronica should check with her employer to find out what her options are, and then get help selecting the best option.

Uncertainty Haunts Even The Most Positive Investors

Even for workers who have a more optimistic outlook on their retirement prospects, employer-provided 401(k) education leaves a lot to be desired. Rachel from Pinellas Park, FL, is in her mid-20s and is on track for a comfortable retirement. But even she feels uneasy about how well she’s utilizing her 401(k).

“I wish it were easier to understand what funds I’ve selected to put my money into so I could make better decisions,” she said. “My employer didn’t provide any resources to help, so I’m not very confident that I chose the plan that’s best.”

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Rachel did her own research online to make her 401(k) fund selections. She later inquired at her bank about getting personalized retirement advice, but they told her she needed a minimum of $50,000 to invest before an advisor would work with her.

How You Can Build Confidence in Your 401(k) Choices . . .

Fortunately, not all investing advisors work that way, but there are enough of them to give advisors a reputation for being overly picky about the clients they take on. Most 401(k) investors never even think to consult an advisor for help with their plan.

“I was one of those people,” Vicki from Joplin, MO, admitted. She was shocked when her advisor offered to look over her and her husband’s workplace retirement accounts, but she’s been pleased with the results.

“I had signed up for a generic plan through the work-sponsored [401(k)] program, and he was able to realign some of the offerings to get a better balanced portfolio,” Vicki explained. “At first I lost money, but he calmed my fears and we ended the year with a 20% return overall!”

Vicki says she and her husband also appreciate having someone to meet with a couple of times a year to review life events and make any necessary adjustments to their retirement plan. “He always has our best interest at heart and that teaching spirit makes us comfortable in discussing our financials and retirement goals.”

And Even Rebuild a Damaged Nest Egg

Glenn from Medina, OH, agrees that sitting down with his financial advisor, even for just a few minutes, makes a huge difference in his retirement outlook.

After losing part of his retirement on Internet single stocks in the dot-com bust of 2000, Glenn lost a lot of his confidence as an investor. With his advisor’s help, Glenn has built a new retirement plan that includes a good mix of mutual funds and consistent investing in his 401(k). Now, Glenn and his wife are well on their way to a comfortable retirement.

“It is fascinating to see this strategy on its way to materializing into a seven-figure retirement fund,” he said.

Stop Guessing and Get Started on a Better Retirement Today

The common denominator among each of these people is that at some point, none of them felt 100% sure about how they were investing in their 401(k)s. Whether you’re an inexperienced investor like Veronica that needs to know how to get started, or you’re more experienced and just want to be sure you’re on the right track, we can put you in touch with an investing advisor with the heart of a teacher.

Together, you and your advisor can review your 401(k), identify the best funds you have to choose from, and lay out your next steps—cranking up your contributions, rolling over any old 401(k)s, starting a Roth IRA—that will lead to a more secure retirement.

Stop playing guessing games with your 401(k)—the eanie-meany-miney-mo method as one investor called it—and talk with an advisor who can help you build a better retirement today!

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