Employer-sponsored retirement plans are getting better, but they've still got plenty of weak spots.
MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, see another way your retirement plan might be letting you down -- with handholding that isn't free.
Leak No. 3: Plans are offering more advice but...
Companies understand that most Americans are confused about investing for retirement. Roughly half of large plans now offer access to some type of investment management, up from 11% in 2007, according to Hewitt. These services don't simply tee up suggestions on what to do with your account. They pick funds for you and adjust your portfolio automatically.
Vanguard, one of the largest 401(k) providers -- largely by improving participants' stock and bond mix. In reality, though, there are no guarantees. Managed accounts in Vanguard's plans returned just 1.9% a year on average between 2007 and 2012, vs. 2.3% for DIY participants.
Part of the problem: Handholding isn't free. In some company plans these add-ons will cost as much as 1% or more of your assets a year, eliminating most or all of the potential advantage. The most popular providers, Financial Engines and Morningstar's Retirement Manager program, charge about half that or less.
Still, those costs are on top of the investment fees you're paying for the underlying funds, which could run you another half or full percentage point -- dragging down your returns.
WHAT TO DO
In your thirties and forties: All the advice you may need is guidance on how much to save (answer: shoot for 15%) and a target-date fund, says Lori Lucas, defined-contribution practice leader at the investment consulting firm Callan.
Target-date funds -- all-in-one portfolios that expose you to stocks and bonds and that automatically grow more conservative over time -- are a form of professional management available in two-thirds of plans.
In your fifties and beyond: At this stage, you've accumulated a sizable sum and the idea of handing over investment decisions to a pro may not sound bad.
"This is especially true for near retirees," says Lucas. "You are making some complex decisions that are both major and irreversible."
The one in four workers 56 to 65 who held more than 90% of their 401(k)s in equities heading into the financial crisis certainly could have used such help. Don't expect miracles, though. Hewitt found that on average investors who sought help performed about the same as investors who were on their own in 2008. They did, however, perform better in 2009 when stocks bounced back.
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