Christine Benz: Hi, I'm Christine Benz for Morningstar.com. For retirement savers today, employer-provided retirement plans like 401(k)s, 403(b)s, and 457 plans are a key way to accumulate money for retirement.
If your employer is matching you on your contributions, don't get bogged down in whether your plan is good, bad, or indifferent. Put in enough to at least earn those matching funds. If you want to contribute more than just enough to earn matching funds, check up on the fees for the plan. That means administrative costs as well as costs for each of the funds. If your plan has high fees, you may be better off investing additional funds in an IRA rather than steering a lot of dollars into the high-cost 401(k).
Some company retirement plan menus are overwhelming because they have so many choices. If you would rather not pick your own investments, you can go a couple of different routes. You could use a target-date mutual fund geared toward your anticipated retirement date. Some plans offer customized managed accounts for their participants. These options are straightforward, and they help ensure that you're diversified and investing in an age-appropriate mix.
Many 401(k) plans offer additional features to help you invest more and keep your investments from getting too risky. Checking the box for the automatic increase feature will help ensure that you invest more when you get a raise. Switching on automatic rebalancing means your plan provider will take steps to reduce risk in your portfolio if certain positions become too large. Both are great features that take the guesswork out of your investing plan.
Thanks for watching. I'm Christine Benz for Morningstar.com.