401(k) Advice: Do You Know How Your 401(k) is Invested?


Two Questions to Answer When You Start a New Job

Starting a new job is both an exciting and stressful time. You feel the excitement of beginning a new chapter and the possibilities for your career, and maybe some anxiety from the uncertainty that lies ahead. And you may benefit from some 401(k) advice.

On top of these emotions is all the paperwork (or online forms) that you need to complete before you finally settle in and begin the job itself. In the midst of this process, there are two important retirement-related decisions you don’t want to overlook.

  1. What investment(s) will you use in your new 401(k)-retirement account?
  2. What should you do with your previous employer 401(k) account?

In this 401(k) advice article, we’ll address some common concerns with both of these questions.

401(k) Advice:
Retirement Plan Facts

Although 68% of American workers have access to an employer-sponsored 401(k) plan, only 60 million Americans actually contribute to one. This isn’t terribly surprising, considering how complex the process can be and how little guidance employees are given.

Of those who invest, The Currency shows the average and median balances of an employee’s account by age.

Age Average 401(k) balance Median 401(k) balance
25-30 $16,371 $6,164
30-35 $33,135 $12,169
35-40 $59,399 $19,964
40-45 $90,774 $26,989
45-50 $123,686 $33,605
50-55 $161,869 $43,395
55-60 $199,743 $55,464
60-65 $198,194 $53,300
65-70 $185,858 $43,152
Source and methodology: This information is pulled from Empower platform data, as of March 31, 2022. It includes active participants of Corporate Defined contribution plans, excluding heritage MassMutual and Prudential participants, and also excludes terminated, deceased and beneficiary accounts.

401(k) Advice:
Target Date Funds

In recent years, target date funds have become a popular choice for 401(k) investors. Matching up a target date fund with your own retirement goal seems pretty logical, not to mention easy.

You need to consider if a target date fund is the optimal investment option for your future. A lot depends on:

  • your age
  • the assets you’ve accumulated
  • your tolerance for risk or desire for safety
  • what other choices may be available inside the plan

Since you will likely accumulate significant value in your 401(k) account, it’s important to make these decisions carefully.

If you don’t remember what investments you chose during your onboarding process, reach out to your plan administrator and ask how to access this information, along with how/when you can change your selections.

401(k) Advice:
Accounts from Previous Employers

If you deferred salary into a 401(k) plan at your previous employer, you have a valuable retirement asset that you should be paying close attention to. Our 401(k) advice is to take control of this account as soon as you can.

An unattended 401(k) account is a missed opportunity for building wealth. Questions to answer include:

  • How is it invested?
  • Have your investments performed well during “bull” markets and protected your gains during “bear” markets?
  • Are your investment choices aligned with your retirement goals?
  • What kind of access do you have to the previous employer plan?
  • Is it easy to access and easy to monitor and manage? 

Keeping your previous employer 401(k) accounts is an option if you are satisfied with your access, ease of use, and investment choices available. Rolling over an old employer 401(k) account into an IRA account is an option that may give you more control and more choices for managing your retirement savings.

401(k) Advice:
Personalized & Professional Planning

If you are not sure about your 401(k) choices and want help planning your retirement, it may make sense to talk with a professional. Schmitt Wealth Advisers will work with you to develop a personalized Goal Plan and help you evaluate your options. 

In uncertain times like this, it’s wise to work with an Adviser who gets to know you, understands your goals, and can help you make prudent decisions for your future.

If you would like to start a conversation about your financial future, shoot us an email at info@SchmittWealthAdvisers.com, give us a call at (513) 813-1580, or get more financial and 401(k) advice from Our Outlook resources.

This material is provided by Schmitt Wealth Advisers, LLC for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Opinions expressed by Schmitt Wealth Advisers are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Schmitt Wealth Advisers, however, cannot guarantee the accuracy or completeness of such information. Investing involves risk, past performance may not be indicative of future results.

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