2. STRATEGIZE, THEN TRACK PERFORMANCE
Formulate an investment plan based on your age, risk-appetite and market outlook. Van Fleet suggests using life-cycle funds, which shuffle the investment mix to reduce risk (and, usually, returns) as the participant ages. Many participants have been automatically enrolled into this type of 401(k) because an increasing number of employers are using it as the default option.
Participants with multiple plans from various jobs should make sure each is a part of a comprehensive investment strategy. Otherwise, it might make sense to combine the individual funds into one account to minimize paperwork, fees and the hassle of overseeing several plans.
It's also important to check returns and fees on a regular basis, not just once a year when the Fidelity statement comes in the mail. If the 401(k) is performing poorly, it might be wise to alter strategies. But keep in mind that retirement funds are long-term investments and that churning investments frequently can diminish returns just as easily as neglect.
3. INFORM FORMER EMPLOYERS OF ADDRESS CHANGES
Participants who don't inform former employers about their relocation could lose out if the company is unable to locate them when it comes time to distribute benefits. Van Fleet says this happens to a "surprising" number of people, when a simple change-of-address card could have kept thousands in their retirement coffers.
4. DON'T RAID THE PIGGY BANK
Some participants opt to take out loans and hardship distributions or cash out of small accounts when they're in a bind. But doing so too often or without a good reason can deplete resources that will be needed even more down the road. This is particularly true for younger investors, because they are robbing themselves of even more compounded interest than older participants would eventually receive.
