401K Day: It’s A Celebration

Posted on September 3, 2007

401K Day is an industry sponsored, annual day showcasing the importance of saving in your employee sponsored profit sharing and 401K plans. In 2007, 401(k) Day is officially on September 7, the Friday after Labor Day. Most of us tend to set up our 401Ks and forget about them. This is an opportune time to take a look at what has been going on in your plan. Here are some things to check out about your 401K:

Personalized Rate of Return. This is the most important number next to how much you are contributing. Personalized Rate of Return is a percentage that represents the performance of this account over a period of time. This number “should” be in the 8% to 12% range in a good year, but will vary year to year. Anything above 8% and I am content based on the amount I contribute each year. Last year was pretty good and I got around 13%.
Contribution Percentage. This is the percentage of income you contribute into your 401K each paycheck. This is a good time to push it up a couple percentage points if you have not done so in a while. Another option is to knock it up a bit each time you get a raise. I usually take a look at raising my contribution very gradually each raise I get so I do not notice it coming out of my paycheck as much.
Current Asset Allocation. This is how your account balance is invested. Make sure you are comfortable with the level of risk involved with how your money is invested. You have to be able to sleep at night, but there has to be an element of risk to achieve the returns necessary for retirement. Find your middle ground.

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