Tuesday, June 2, 2015

Making the Best of Your 401(k)

Here’s the good news about retirement planning: Employees are participating in their 401(k) plans at a record rate according to a survey from Aon Hewitt. Participation rates  hit 79 percent in 2014, which is the highest they’ve been since the company began tracking such data in 2002. Average plan balances are also at a record high, rising from $91,060 at the end of 2013 to $100,320.

Here’s the bad news: They’re not doing much to manage those plans. Only 24 percent of workers raised their contribution rates in 2014, and just 15 percent rebalanced the investments in their accounts. Unless you’re in target date funds, which do the rebalancing for you, changing the mix in your retirement portfolio as you age is a necessity.

Employees also aren’t taking advantage of all the investment options at their disposal. The average account was invested in just 3.6 funds last year, down from 3.7 in 2013 and 3.9 in 2012.

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