Ten Years In: Time to get serious about your 401(k)

NEW YORK (MainStreet)—You might not think about it until money is tight and you take a good look at your paycheck stub. The taxes! And insurance! The deductions that whittle away at your take-home pay. And what's this? Oh yeah, "Retirement." What a miserable mess that has been. They're taking money out of every paycheck and putting it into that dark hole called a 401(k). You've got five, ten years or so of paying-in under your belt -- so is the freaking thing growing at all? And who has the time to figure these things out? In this just-married, just-had-a-kid, just-getting-by world you're living in, how can you make sense of your 401(k)? Can you patch up your 401(k) and make a true recovery?

Also see: Dipping into Your Retirement Funds Is O.K.--Sometimes

A 2011 report published by Financial Engines, an independent investment advisory firm founded by Nobel Laureate Bill Sharpe, gauged the impact of professional investment help in 401(k) plans, such as target-date funds, managed accounts and online advice -- collectively referred to as "Help" in the report. "Help in Defined Contribution Plans: 2006-2010" analyzed eight large 401(k) plans representing more than 425,000 individual participants. Across all age groups and in a range of market conditions, portfolios of participants using "Help" experienced higher returns with lower risk on average than those not using Help. The annual investment performance gap between the portfolios of those participants using Help and those not using Help was 2.92%, net of fees.

"This investment performance difference can have a meaningful impact on wealth accumulation over time," saod Wei-Yin Hu, director of financial research with Financial Engines. "For example, using the return difference of 2.92%, suppose that two participants — one using Help and one not using Help — both invest $10,000 at age 45. Assuming that both participants receive the median returns identified in the report, the Help Participant could have 70% more wealth at age 65--$71,400-- than the Non-Help Participant--$42,100."

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