You probably never even think about your 401(k), until that quarterly statement shows up. Then, you open the envelope and you look at 2 numbers: your account balance and the rate of return.
It doesn’t have to be that way. If you’re 1 of millions of American employees (about 58%) with access to a plan at work, you most likely also have access to a website. You can check your balance whenever you like. “All major recordkeepers have a site,” says Drew Way, an analyst with Corporate Insight, a firm that tracks websites and tools from retirement plan providers.
But do retirement savers check their accounts online? No.
Way says that 401(k) industry providers want retirement savers to log on occasionally to make sure everything is still a suitable decision: amount being saved, how the money is being invested.
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Stay away at your own risk
Most plans enroll their employees at 3% of salary. That might be an OK savings rate when you’re just starting out, but most financial professionals agree midcareer workers should be saving much more – anywhere between 8% and 10% when possible.
Financial decisions may be a time-consuming energy drain, but Heather Shultz, Fidelity’s vice president of participant marketing, says checking the website is pretty easy. “People think this is going to be a lot of work, and that turns them away before they go,” she says.
Another reason to visit: Employees who spend more time engaged with their 401(k) tend to be more active savers.
The websites tend to be rich with information way beyond your own account balance and activity. Most have information, videos and educational resources. What-if tools — What if I save more? What if I retire in a specific year? What if I switch my investments around? — can show you the effects of upping your savings rate or other account changes.
These tools help project what your income might be in retirement, and Way believes they are among the most valuable online resources. “Every major recordkeeper has some retirement planning income project tool,” he says, with some available via mobile device.
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Retirement plan companies keep track of what happens when and after people visit. Most actions take place within a week or 2 of visiting. Schultz says it depends on the size of the decision: “Someone might be more likely to make a small increase in savings than make a big investment change.”
Generally, people seem to benefit by visiting and taking a look around. The statement is a backward-facing snapshot, Way says. But going to the website lets you look forward at what could happen, depending on your contributions or mix of investments. And, he says, the better ones are also education hubs that let you look at different aspects of retirement. If you are a beginner, a sophisticated website points you toward tools and quizzes on basic finance that can help boost your investing knowledge and sharpen your skills.
The website is so much more dynamic than the statement, Way says. The statement shows you only what happened. The website lets you look forward, and supplies knowledge and tools to help you succeed — “provided the market cooperates,” he says.
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