3 Retirement Moves to Make at Work That Will Pay off in 2018 and Beyond

Fall is the popular time for open enrollment at work, when employers lay out all the ins and outs of their benefit package for the coming year, and leave it to workers to decide if they want to change or update any of their benefit coverage.

I bet plenty of you just roll your eyes when the email arrives telling you the deadline for updating your benefits. You either ignore it, or opt to keep everything as is.

Please don’t be so lazy. Especially when it comes to your workplace retirement plan. Take a few minutes to consider taking these steps to get the most value out of this important workplace:

• Save More in your Workplace Retirement Plan. The average 401k participant saves about 5% to 6% of her salary for retirement. That’s okay, but nowhere near enough. At a minimum I recommend everyone aim to set aside 10% of their salary, asap, and honestly, 15% is even smarter. If you can’t stomach going from 5% today to 10% next year, at the very least raise your contribution rate by at least 2 percentage points for next year. Don’t tell me you can’t afford it. What do you expect to live on in retirement? Besides, the truth is, once people increase their savings rate, they tend to adjust to having less money show up in their paycheck. 

• Opt in for Automatic Escalation of Your Retirement Contributions. Plenty of retirement plans offer a valuable automated service that increases your savings rate from time to time. The usual adjustment is an annual 1 percentage point increase. The problem, is that you have to actively say you want to use this service. If you aren’t currently signed up for auto-escalation, do it right now. It’s the easiest and surest way to make sure you stay committed to increasing your retirement savings rate.

• Check out the Roth 401(k) option. More and more employers now offer a Roth 401(k) along with the Traditional 401(k). If your plan recently added the Roth option, I think you are nuts to not consider using it. The opportunity to have tax-free income in retirement is fantastic. And that’s what you can get with a Roth 401(k). Not being taxed in retirement is going to be a big help. Remember, every penny you withdraw from a Traditional 401(k) will be taxed as ordinary income.