6 Retirement Savings Tips for Your Retirement Plan 

You probably know what you pay for streaming, gas or even groceries every month. Fewer of us could say, off the top of our heads, what we’re putting into our retirement plan or where that money is invested. 

That’s normal. Retirement accounts are built to run quietly in the background. But a few quick, high-value check-ins a year are usually enough to keep your plan aligned to your goals. Continue reading for six steps to help strengthen your retirement plan. 

Log in to your account at least twice a year

Sign in to your retirement account at least twice a year, plus after any raise or major life event. Many people enroll in an employer-sponsored plan and rarely sign in again. 

You don’t need to watch your account daily. With a few visits a year you can: 

• Verify your contributions are being deducted and invested the way you intended. 
• Review recent account activity. 
• Confirm your personal and contact information (and keep it updated). 
• Explore the educational resources and planning tools your plan offers.
   

Research highlighted by the National Association of Plan Advisors found that retirement plan participants who engage with financial education and planning tools may save at higher rates and may build larger account balances over time. Staying engaged with your retirement plan may help you better understand your options and make more informed decisions about your financial future.

Check whether you’re on track for retirement

This may be the most overlooked retirement planning habit of all. Being on track means your savings rate, account balance and retirement timeline add up to the income you’ll need. Saving consistently is key, but knowing whether you’re on track matters just as much. 

You don’t need a perfect forecast or a detailed financial plan to benefit, either. Simply understanding where you stand today can help you make better decisions tomorrow. So, take an extra moment to access your plan’s forecasting tools, use a retirement income calculator or schedule a conversation with a financial professional to help you get a clearer picture of your future.

Contribute enough to earn the full employer match

If your employer matches contributions, contribute at least enough to receive the full match. For many participants, contributing enough to receive the full employer match may be one of the most impactful changes they can make. Contributing below the match threshold may mean missing out on available employer contributions. 

Learn more: How to Maximize Your 401(k) Employer Match 

Match formulas vary by plan. A common structure is an employer contribution equal to a percentage of what you put in, up to a set share of your pay. 

For example, a plan might match 50% of what you contribute, up to 6% of your pay. A participant earning $60,000 who contributes 6% ($3,600) would receive an additional $1,800 from their employer. Match formulas vary widely, so check your plan documents for the formula that applies to you. 

Some plans also apply a vesting schedule, meaning you need to stay employed for a certain period before matched dollars are fully yours. 

Check your plan documents or your plan’s website for your match formula and vesting schedule. If your current contribution rate falls below the level needed to earn the full match, raising it to that level is usually the first change worth making.

Increase your contribution rate when you can

Many participants pick a contribution rate when they first enroll and never revisit it. Raises, bonuses or a drop in monthly expenses can all open the door to saving more.  

A better approach is to increase your contribution rate whenever your budget allows and revisit it after every raise or bonus. One effective way to improve retirement readiness is also quite simple: Whenever it makes sense to do so, save a little more. 

Even a modest increase of 1% or 2% of your pay can add up meaningfully over a career, giving more of your money time to benefit from potential long-term growth and compounding. 

Consider a hypothetical participant earning $60,000 who raises contributions from 5% to 6% of pay, about $50 a month. Assuming a 6% average annual return over 25 years, that additional $600 a year could grow to roughly $33,000. Note, this a hypothetical illustration only. It assumes a constant rate of return and doesn’t reflect fees, taxes or investment expenses. Note, the assumed rate is for illustrative purposes only and is not intended to predict future investment performance. Actual results will vary. 

It’s also worth knowing the annual contribution limits and the catch-up contributions that may become available as you get older. The IRS periodically adjusts retirement plan contribution limits and allows eligible participants to make additional catch-up contributions, which can help many workers accelerate savings as retirement gets closer.   

Limits and catch-up eligibility change from year to year, so check your plan documents or your plan’s website for the amounts that apply to you. 

Pro tip: If your plan offers automatic contribution increases, that feature can raise your savings rate gradually without you having to remember to make the change each year.

Review your investment mix

Review your investment mix about once a year, and after any major life change. Your retirement investments should support your long-term goals, and they shouldn’t be set and forgotten. 

Three things are worth checking: 

• Whether market performance has pulled your mix away from the allocation you chose. 
• If your retirement timeline has changed. 
• Your comfort with risk still matches the investments you hold. 

What made sense when you were 30 may not be the right fit when you’re 50, and major life events can also change your goals, timeline or comfort with risk. 

A periodic review helps confirm your selections still reflect what you’re working toward. For some participants, that simply means confirming nothing needs to change. Others may decide it’s time to explore different options available through their plan. 

Remember, retirement investing isn’t about finding the “perfect” investment. It’s about maintaining a strategy that fits your goals and your risk tolerance.

Update your beneficiary designations

Review your beneficiary designations at least once a year and after any major life event. Beneficiary designations are among the most important details attached to your retirement account, and among the most overlooked. 

Marriage, divorce, the birth of a child or the death of a loved one can all change who you want to receive your retirement assets. If your beneficiary information doesn’t reflect your current wishes, your account may not be distributed the way you intend. 

The IRS notes that retirement account owners designate beneficiaries to receive account assets after death, making it important to review those designations periodically and after any significant life change.   

Even if nothing significant has changed recently, reviewing your beneficiary designations is worth the two minutes. 

Small steps add up 

Nobody retires well because of one brilliant decision. It’s usually the unglamorous stuff, done repeatedly: logging in, nudging the contribution rate up and keeping the paperwork current. For more tips, read our blog, 5 Steps to Help Boost Your Employer-Sponsored Retirement Plan. 

Each of these six steps takes only a few minutes. If it’s been a while since you looked at your retirement plan, pick one this week and start there. 

Frequently asked questions 

How often should I review my retirement account? 

Many financial professionals suggest reviewing your account at least twice a year, plus after significant life events such as marriage, divorce, the birth of a child or a job change. 

How do I know if I’m on track for retirement? 

Many retirement plans offer calculators and planning tools that estimate future retirement income based on your current savings and contribution levels. A financial professional can also help you evaluate whether your strategy fits your goals. 

Should I contribute enough to get my full employer match? 

If your plan offers a match, contributing at least enough to receive it in full is generally considered a priority, because the matched dollars are additional money added to your account. Match formulas and vesting schedules differ by plan, so check your plan documents for the details that apply to you. 

How much should I contribute to my retirement plan? 

Some financial professionals suggest a total savings rate in the range of 10% to 15% of pay, including any employer match. The right number depends on your age, income, existing savings and when you plan to retire, so a retirement calculator or a conversation with a financial professional can help you set a target that fits your situation. 

What should I do with a retirement account from a previous employer? 

Participants generally have a few options. Leave the account in the former employer’s plan if allowed, roll it into a current employer’s plan, roll it into an individual retirement account or take a distribution. Each option carries different tax and fee implications, and taking a distribution before retirement age may trigger taxes and penalties. A financial professional can help you compare the options. 

Disclosures 

Representatives of Ameritas do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your specific situation.