Your Money: Four ways to put your retirement savings on autopilot

Saving for retirement should be at the top of your to-do list, but all too often, it gets pushed back. Automating your retirement savings can be the difference between getting it done and just wishing you had. The biggest truth about retirement savings is the sooner you start, the better off you will be, so the best time to start is now.

Putting some tasks on autopilot practically does the job for you.

Ways to Automate Retirement Savings

In generations past, saving for retirement was manual and tedious. Writing and mailing checks, waiting for mailed account statements, reading about the market in financial newspapers, and meeting with your advisor took up a lot of time. There are more efficient ways to manage your finances now.

Join Your Employer’s 401(k) Plan

A company 401(k) is often the first step to retirement savings. As soon as you have the option to sign up for an employer’s retirement plan, you should do it. The money comes out of your paycheck pre-tax. At a minimum, take full advantage of any employer match; otherwise, it’s like leaving free money on the table.

Automate IRA Deposits

You can also set up recurring deposits into your retirement accounts through payroll or automated transfers from your bank account into your retirement accounts. By doing it this way, you won’t even have a chance to miss the money or decide to use it on something else.

Automate Increases

You should also increase the amount you save towards retirement over time. Many 401k plans give you the option to automatically increase your savings each year by a specific dollar amount or percentage, which can be one of the smartest moves you’ll make.

Automating Rebalancing

Asset allocation is key to successful retirement portfolio management. Once you determine whether you want to allocate more to stock to achieve a higher expected return, with more volatility, or more to bonds to achieve less volatility, and lower expected returns, it’s important that your portfolio not be allowed to drift. Most 401k plans offer the ability to automatically rebalance periodically. Rebalancing may help returns by selling outperforming but more expensive investments and buying underperforming, but cheaper investments. More importantly, rebalancing keeps your portfolio allocation in line with your target and doesn’t allow the portfolio level of volatility and expected return to change meaningfully over time.


John A. Frisch, CPA/PFS, CFP®, AIF®, PPC™ founded Alliant Wealth Advisors in 1995 and has over 30 years of experience as a financial professional. In his free time, he’s an avid long-distance runner, a sport that requires discipline, patience and vision. John applies these same skills to his professional pursuits: He helps families and retirement plan sponsors adopt a patient, disciplined approach to overcoming financial challenges and reaching their distant goals along a clear path. Learn more at www.alliantwealth.com or to read past articles, visit www.alliantwealth.com/blog.

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