You wouldn’t purchase a car and not get the oil changed every so often. You know that every 5,000 to 7,500 miles you need some basic car maintenance to keep everything in working order.
You should take a similar approach with “maintenance” on your 401(k). Doing so will keep you headed in the right direction toward your retirement goal.
Here’s what you need to do:
- Start by making a conscious decision about how much you are going to contribute to your 401k.
- Select a mix of investments that meet your tolerance for risk.
- Schedule time in your calendar to check on your investments and make contribution increases.
Why does this strategy work?
A few minutes a month can make drastic improvements to your 401k over the years, meaning more money for retirement!
It takes just a few minutes to ensure your asset allocation is still on target. Schedule a time to re-allocate your investments two to four times a year.
Perhaps the most important thing to remember about your 401k: Increase your contribution rate one or two percent each year! Choose your birthday or an anniversary date to make this increase so you won’t forget.
Don’t let a set-it-and-forget-it attitude ruin your 401k.
Scott Holsopple is the President & CEO Smart401k