MarketWatch: Eight do's and don'ts for your 401(k)

[Omaha Steve]

http://www.marketwatch.com/story/eight-dos-and-donts-for-your-401k-2010-04-02

By Robert Powell, MarketWatch

BOSTON (MarketWatch) -- When it comes to saving for retirement and building a portfolio to last a lifetime, most Americans are way behind the eight-ball, the nine-ball and all the other balls on the pool table.

More than 54% of Americans report that the total value of their household's savings and investments, excluding the value of their primary home and any defined-benefit plans, is less than $25,000, according to the Employee Benefit Research Institute's annual Retirement Confidence survey. What's worse, 27% have less than $1,000 in assets. Just 11% have more than $250,000 set aside.

Yes, those figures include Americans young and old, those just starting in the work world as well as those about to check out, but in the main many Americans need to modify their savings and spending patterns to have any hope of enjoying a standard of living to which, rightly or wrongly, they've become accustomed.

And it's not rocket science. At least, it's not according to some experts. Here are some nest egg do's and don'ts, according to Hewitt Associates and Merrill Lynch.

1. Participate in your plan

If you're lucky enough to have a 401(k) at work, contribute to it. That will greatly improve your financial well-being, according to Bank of America Merrill Lynch which recently introduced a new tool designed to monitor and score the "financial wellness" of 401(k) plans in general and, by extension, the employees who participate in them.

The new tool looks at four plan-participant behaviors, including saving, investing, setting and monitoring retirement goals, and nest-egg preservation. Not surprisingly, savings and investing behavior -- which represent 80% of the overall score -- are the primary drivers of financial wellness.

According to Kevin Crain of Merrill, the healthiest 401(k) plans (at least among Merrill clients) are those where 80% of the eligible employees are participating in the plan. The least healthy are those where 70% of eligible employees participate. In addition, he said the healthiest 401(k) plans also have automatic enrollment, where eligible employees are automatically enrolled in the 401(k) plan; automatic increases, where the percent of salary employees contribute to the 401(k) plan is automatically adjusted upwards on a regular basis; and investment advice provided to workers.

2. Avoid risky behavior

FULL story at link.

[ShockediSay]

1. What 401 K? B/n commissions and nefarious behavior IMHO,

the Wall Streeters and the Big Banks tanked it.

[Lost4words]

2. 401Ks I had some of those, all gone now.

My retirement plan went from Morgan Stanley to Smith & Wesson.

[Sherman A1]

3. +1

Thanks for posting Steve! It's always good to have more information. :hi:

[propaper]

4. I have contributed the maximum I could every year since they were allowed & IRA's b4 that.

There have been ups and downs but over all it looks pretty good. I keep track of the principle. I also changed jobs about 12 years ago and rolled that 401k out into an IRA. I think I started saving seriuosly about 1986 when I was just 22 and just graduated from college.

[doc03]

5. My 401k has come back real well since the crash

as of April 30 I am retiring and looking forward to the income from it. I would have a much bigger 401k if our Union wouldn't have prevented the company from matching our contributions years ago. Their f---ed up reasoning, it wouldn't be fair to the people that didn't contribute. So I tried to be responsible and invest for my retirement and get punished because another employee drinks up or gambles away his pay check.

[SocialistLez]

6. I'd still much rather

have a pension.