Tools to Help Automate Retirement Investing

Company-sponsored 401(k) plans have undergone significant changes over the years, including matching contributions from your employer and automatic enrollment, rebalancing, and contribution escalators. Even if you don't have these options, you can still model your retirement investing behavior after some of these plan features.

Auto Enrollment

If your retirement plan doesn't offer automatic enrollment, ask what you must do to join. If you don't have a workplace plan, make it your mission to research the qualifications and contribute to an individual retirement plan.

Auto Contributions

Before starting a new job, forecast your take-home pay for your monthly budget after subtracting an amount for retirement contributions. (Remember that your contributions will likely be deducted on a pre-tax basis.) Start contributing as soon as you're eligible because time means everything when building your retirement accounts.

Auto Escalators

Why not put the extra money into a retirement account when you get a raise? Employers can invest your raise automatically — before tax — so you do not even see it in your paycheck. If yours doesn't, request a change to your contribution level.

Auto Choice

Some people don't enroll in 401(k) plans because they don't want to choose any investments. So, some employers automatically put employees' contributions into target-date or balanced accounts. Do the same if you don't want to choose among investment options.

Auto Rebalancing

If you choose to invest in a workplace or other retirement plan, it pays to diversify.* To keep your portfolio diversified as planned, you'll need to rebalance it regularly, say every six or 12 months. Many 401(k) plans include this feature; otherwise, set yourself a reminder.

Auto Rollover

Some employers automatically roll over retirement plan balances for employees leaving one job for the next, but the new employer will have to accept these rollovers. If your previous employer doesn't do this automatically, ask your new place of employment about rolling the balance over.

* Diversification cannot eliminate the risk of investment losses. Past performance won't guarantee future results, and investing in stocks or mutual funds can result in a loss of principal.