Take 5: Simple Ways to Protect Your Retirement Savings

We take years to save for our retirement, hoping for the best time of our lives. Making sacrifices, painstakingly looking ahead.

Yet too many of us don’t take even five minutes to protect it.

You are the best insurance policy for protecting your retirement — and it’s not likely you’ve thought of it that way. “My account is so small; the bad guys want bigger accounts,” you may say to yourself. But cybercriminals are likely to consider you wealthy. Many cybercriminals hail from countries that do not have the same standard of living as we do in the United States.¹

Saving for retirement takes years of discipline and planning. Protecting those savings deserves the same attention as building them, but it does not need to take as long!

Retirement accounts are attractive targets for cybercriminals,² and simple mistakes like using weak passwords or not doublechecking your profile can have significant financial consequences. These five simple habits can dramatically reduce your risk.

1. Secure Your Retirement Account

Enable multi-factor authentication (MFA), use a strong and unique password only you would know, and never share your log-in credentials. Ensure you have fully completed your profile and, when you can, use an optional e-mail address outside of your work address so you can receive any account alerts when not at work.

Bad actors gain access when you let them in. You must lock them out with information you give the plan’s recordkeeper.

Periodically call your plan’s call center. Recordkeepers are increasingly using voice recognition as one of the tools they incorporate for cybersecurity measures. So, if you call in with a certain background all the time, and then a bad actor calls in with a different background noise, a red flag raises and additional security questions may be asked.

Do not click links in unsolicited emails or text messages claiming to be from your retirement plan. Instead, access your account directly through your recordkeeper's website. Frankly, I do this even if I recognize the colors and context of an e-mail from our plan’s recordkeeper — it just makes me feel safer.

2. Review Your Account Regularly

Many participants rarely log into their retirement account after enrollment. We often find participants don’t even finish filling in their profiles.

Some participants have the idea that they need to check their investments when they access their account, but that is not the purpose for of a regular account review. In fact, if you have made the right investment allocation, you do not need to review it as often as the rest of your retirement account.

Review your account at least quarterly to verify payroll contributions, beneficiary information, and personal contact information. Promptly report any unfamiliar activity. Early detection improves the chances of stopping fraud before substantial losses occur.

Checking your deposits helps you discover errors in your employer’s payroll process so you can ensure what you intend to save is going into your account. Quarterly review makes it easy to spot errors.

3. Diversify Your Investments

Diversification remains one of the most effective ways to reduce investment risk over the long term. Consider maintaining a mix of investments that matches your age, retirement goals, and tolerance for market fluctuations.

Do not procrastinate as you get closer to retirement! Rebalance the allocation when appropriate. Remember that diversification cannot eliminate losses, but it helps avoid concentrating risk in a single investment.

It’s important to remember the other risk: Being too conservative with your investment choice and its allocation so your savings must be larger or longer to reach your goal. The longer your time to retirement, the greater risk you can take as long as you watch and monitor your allocation.

My best advice is to set it and look at it every few years as you get close to retirement or have a significant life change. Emotion has tempted me over the years to make a change, but I was mentored to set it right and change it as needed and I’m grateful for the advice. 

4. Review Your Beneficiary Designation at Least Annually

Plan administrators can share numerous tales about benefits paid to unintended parties. These stories are preventable — that’s why they are so sad!

Life events take us to various places with different people: spouses, partners, children, as well as life’s knowledge of how these new people interact with each other and how their needs change.

Be thoughtful in your decisions and ensure changes are communicated to the plan administrator. Although the plan’s recordkeeper may hold your beneficiary designation, ensure your plan administrator has a copy. Sometimes these designations are lost during a change in plan recordkeepers. Some designations require spousal consent and if your spouse consented, be sure you keep a copy along with the beneficiaries and your plan’s administrator who is noted in the summary plan description (SPD).

Understand how these designations work so you can be comfortable in your choices and protect your retirement savings to benefit the intended people as a legacy.

5. Know Your Retirement Plan Features and Its Options

Employers can choose from a variety of plan features when designing the plan they believe is right for their employees. Not all 401(k) plans are alike. Pension plans are unique and rarely have similar features to one another. Don’t expect to understand everything at once, but little increments over dedicated time periods will give you confidence for pre-retirement options for life events and managing distributions as retirement begins.

Understanding your retirement plan can help you make better financial decisions. Learn whether your employer offers matching contributions, how vesting works, what investment options are available, and how loans or hardship withdrawals could affect your long-term retirement security.

Employees today value a match more than an employer profit-sharing contribution, which is likely because employer contributions are misunderstood. A match is valuable because once it is announced, you can count on it, and it encourages you to stretch your own salary deferral to meet its maximum.

But for those participants in a pinch for cash who must reduce their salary deferral, an employer that offers profit-sharing after a good year allows the employee to continue accruing retirement savings. It is better than salary deferrals because the contribution does not run through payroll and therefore payroll taxes.

Review your SPD and any summary of material modification, which updates the SPD periodically, and ask questions whenever something is unclear. The annual required notice for fees, the “404a5” Notice, should be written in a manner so you understand the fees your account is charged.

Fees charged against your account will affect your ultimate retirement income. Likely your employer pays some fees directly to the service providers, but if you invest in a fund, the fund has fees charged against its performance. Compare performance along with fees for comparable fund types.

Protecting your retirement account includes learning enough to identify excess fees or plan features that can help you better plan retirement.

Take 5 Minutes Today

□ Enable multi-factor authentication.
□ Review your account balance and recent contributions.
□ Confirm your beneficiaries.
□ Update and provide alternatives to your email, phone number, and mailing address.
□ Contact your recordkeeper immediately if you notice suspicious activity.