THE BLOG
07/17/2013 04:50 pm ET | Updated Sep 16, 2013

It's Time for Your Midyear 401(k) Checkup

Quarterly 401(k) statements are out and yours may reflect the double-digit rally in the stock market so far this year. But it's important to remember that past performance doesn't guarantee future results. The halfway point of the year is the perfect time to reevaluate your 401(k) plan to make sure that your risk exposure, savings rate and investments are in line with your retirement savings goals.

Here are a few key things to keep in mind:

  • Make sure you're contributing at least enough to get your full company match. Many employers will match some or even all of your contributions. Put that money to work for you.

  • Investigate investment options like index mutual funds, which generally offer lower fees than those associated with actively managed funds. Lower cost investments allow more of your money to work for you.
  • Review your 401(k) portfolio and make sure it's properly diversified. You may need to consider rebalancing to get back to your target allocations given the sharp rise in the stock market this year. You can do this yourself or check whether your plan offers an automatic rebalancing feature.
  • Take advantage of professional investment advice and tools offered with your plan. At Schwab Retirement Plan Services, Inc., we have found that employees who used third-party, professional 401(k) advice tended to increase their savings rate, were better diversified and stayed the course in their investing decisions.*
  • Check to make sure you aren't overloaded on company stock no matter how well it's performed. Typically, company stock should make up no more than 20% of your overall 401(k) portfolio.
  • Don't chase performance or make the mistake of trying to time the market. Historically, a majority of the stock market's annual gains come from just a handful of trading days, so we believe it's important to remain invested throughout the ups and downs. Remember, a 401(k) is a long-term savings strategy.
  • After you've checked off these items, you may be able to relax more and enjoy the summer knowing you've taken steps to help keep on the right track toward a sunny retirement.

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    *Charles Schwab in conjunction with Koski Research, The New Rules of Engagement for 401(k) Plans, 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. (CS&Co.), Schwab Retirement Plan Services, Inc. (SRPS), or any of their affiliates.

    Investors should carefully consider information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 800-435-4000. Please read the prospectus carefully before investing

    The employer contribution is paid on a pre-tax basis and may be taxable at withdrawal.

    Investment returns and principal value will fluctuate with changes in market conditions such that shares may be worth more or less than original cost when redeemed.

    Lower expenses do not necessarily translate into higher returns.

    Rebalancing and diversification do not protect against losses, cannot ensure a profit, and do not guarantee that an investor's goals will be met.

    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. 0713-5043