A lot of people view their employer’s 401(k) as a “set it and forget it” type of investment, but we like to take a little bit of a different approach here at Summit.
Typically, with a 401(k), what happens is the company has the HR team and a third party administrator establish that 401(k) plan, and when you start contributing to it, there’s typically a standard investment protocol, something that you will automatically be invested in inside of that account.
The thing to be cautious about is that it’s not always the proper investment for every single client. Everybody has a unique situation and each investment inside of that 401(k) is not made for everyone. If you choose the automatic investment, it will usually be a target date fund. A target date fund means that someday down the future, just say it’s 2050, the investments will be based on a retirement date of 2050, and that sounds like a really easy “set it and forget it” solution. The problem there is that inside of that target date fund, the investments are being adjusted to be more and more conservative as we near that date. So, if you choose the right target date fund, it might be a good solution for you. But more often than not, using a customized allocation with the funds that are actually available inside of that plan can be a better fit since we can go and update that periodically to make sure that we are gliding appropriately with your actual retirement plan.
One of the biggest values we as advisors here at Summit can offer is that we can actually give you a recommended customized allocation using these specific funds inside of your 401(k).
Instead of using one of the generic target date funds, we can actually just customize that allocation for you based on your goals. Please, reach out to one of us here at Summit. We’d be happy to help you allocate that 401(k) and get you set up for retirement.