Medical insurance is top of mind for many of us these days. Besides the controversy surrounding implementation of the new health care law, we're also in the thick of open enrollment season. That's when millions of workers get the chance to review and potentially switch their benefits. While health care typically gets much of the attention, focusing on retirement benefits can be just as important. Taking the time to give your 401(k) an annual check-up now, while benefits are top-of-mind, can help put you on course for a healthier retirement. As I like to say: Set it, but don't forget it!Here are some important things to remember:
- Contributing is great, but contributing enough matters even more. Make sure you are contributing at least enough to get the full employer match. Try to boost your contribution level by one percent (or more if you can) whenever you get a raise.
- Play catch-up if you can. Anyone 50 or older can contribute even more 401(k) dollars than younger workers. In 2013 and 2014, participants age 50 and up can save an additional $5,500 in their 401(k), on top of the $17,500 annual base limit. Not only will this help boost your nest egg, but it will lower your current payroll taxes too.
- Perform a rebalancing act. Check your asset allocation to make sure it still matches up with your age and ultimate retirement goals. This is especially important after significant stock market moves, like this year's double-digit gains in the major averages. As a result, your mix of stocks and bonds may have shifted quite a bit. Check to see if your plan offers an automatic rebalancing tool or professional advice component to help with your decision making.
- Be cost conscious. By law, participants are getting detailed information about the fees associated with their 401(k) investments. Look for that disclosure statement, check to see what you're paying and then investigate whether your plan offers lower cost investment options like index funds.
- Designate. Review your beneficiary designations, especially if you've recently experienced a major life event like marriage, divorce or birth/adoption of a child. By law, your current spouse will always be the beneficiary of your 401(k)assets unless they've signed a waiver.
Including your 401(k) plan in your annual benefits review can help get your retirement in good shape for the future.
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. (1113-7754)