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Don't DIY Your 401(k)

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Chances are, your car is vital to maintaining your lifestyle -- getting you to work and the gym, getting your kids to school, getting groceries from the store to your fridge. Do you trust yourself with its upkeep? Unless you're a mechanic by trade, you probably seek out a professional to keep your car in good shape.

So, when it comes to managing your 401(k) plan, why wouldn't you turn to a pro for help? We know that many people use their 401(k) as a vehicle to drive them toward a healthy retirement. In fact, a recent survey* found roughly nine out of ten respondents are relying on themselves for the money they'll need in retirement and most are using a 401(k) to get there.

Fortunately, many 401(k) plans offer some type of third-party professional advice on everything from asset allocation to risk tolerance. This should come as good news to the half of survey respondents who said 401(k) investment choices are harder to understand than their health care plan.

Here's how professional advice can help you take better control of your investments:**

  • Savings & Returns. People who receive advice tend to save more, which is vital to building up your nest egg. The more money you invest and the sooner you invest it, the more time it has to grow.
  • Diversification. Data shows that workers using advice are invested in eight or more asset classes, on average. Do-it-yourselfers are invested in just three asset classes, on average, leaving them more vulnerable to volatility and sharp market moves.
  • Investing Behavior. Finally, people who seek professional advice when making decisions regarding their 401(k) tend to stay with the market in good times and bad. Saving for retirement through a 401(k) is a long-term strategy that can help your money grow over the span of your career.

As you can see, taking advantage of professional help that may already be offered as part of your 401(k) plan could go a long way toward easing some of your investing concerns. While nobody can predict the future, we all need to prepare for it. Planning ahead, taking action and getting help along the way are key steps to staying on the road toward a more secure retirement.

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*Schwab Retirement Plan Services, Inc., in conjunction with Koski Research, 401(k) Participant Survey, 2013. The survey is based on 1004 interviews and has a three percent margin of error at the 95% confidence level. Survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25-75 years old. Survey respondents were not asked to indicate whether they had accounts with Charles Schwab. All data is self-reported by study participants and is not verified or validated. Respondents participated in the study between June 5 and June 11, 2013.

** In-depth behavior analysis of 401(k) plans serviced by Schwab Retirement Plan Services, Inc., 2010. Retirement plan investment advice is formulated and provided by GuidedChoice Asset Management, Inc. (GuidedChoice®), which is not affiliated with or an agent of Charles Schwab & Co., Inc., Schwab Retirement Plan Services, Inc. (Schwab), or any of their affiliates.

Schwab Retirement Plan Services, Inc., Schwab Retirement Plan Services Company, and Charles Schwab & Co., Inc. are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation. Brokerage products and services are offered by Charles Schwab & Co., Inc. (Member SIPC). Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company provide recordkeeping and related services with respect to retirement plans. 0913-6092