Does your 401(k) offer any of these online tools that are growing in popularity by the minute? If not, it could be dragging participation and contribution rates down.
Here are three digital tools the 401(k) advisors and account managers at BeManaged say all plans should have:
- Online increases. The easier it is for plan participants to increase their contributions, the likelier they are to do it. Many want to save more, they just don’t want to have to fill out forms to do it. There are plans out there that let participants increase contributions with just a few clicks of a mouse. An online feature like this could also allow participants to set up annual contribution increases (by percentage of pay) on a date of their choice.
- Take-home pay calculator. This can help participants decide how much money they can sock away by telling them how much a contribution increase will cost them from their checks.
- Risk/return calculations. These show participants how the amount of risk in their portfolios affected them over a designated period of time. For example, high-risk investors, who invest a lot in the stock market, would be able to see how much money they would’ve saved during the downturn of 2008-2009 if they’d chosen less-risky investments (more bonds, CDs, etc). On the flip side, those same investors could look at how much more their high-risk, stock-heavy investments made over lower-risk options when the stock market rebounded in 2010.
(Note: When calculating investment mix — stocks versus bonds, CDs, etc. — participants prefer their plans show percentages, not dollar amounts. Percentages make the info easier to digest.)