By
CNBC
updated 10/16/2003 3:53:25 PM ET 2003-10-16T19:53:25

The week after Labor Day is the perfect time to think again about the days when you will be relying on the fruits of your labor — your retirement. This week, companies across the country are educating their employees about the benefits of participating in their employer’s retirement plan, according to the Profit Sharing/401(k) Council of America. Here’s a checklist you should use when giving your 401(k) a checkup.

Why do workers need to give their 401(k) a checkup? There have been a lot of changes in the financial markets in the past year, and if you are overweighted in one asset class or another your portfolio could suffer more than you’d expect.

Say you had planned to have an even allocation between stocks and bonds in the mid-90s. If you didn’t touch your portfolio, you probably became overweighted in stocks. And during the bull market, you probably thought you were a genius until the bubble burst.

If you had reacted by allocating 60 percent of your portfolio to bonds last year, but you haven’t looked at your account since, you may find your portfolio is down more than you expected because of the recent turmoil in the bond market.

That’s why it’s good to take a look at your 401(k) and rebalance at least once a year — more often if your asset mix gets out of whack by more than five percent or so.

But it turns out that most don’t make any changes at all: Only 17 percent of 401(k) participants made any trades in their accounts last year, according to Hewitt Associates.

That’s no surprise when you consider that, according to Federal Reserve estimates, Americans’ holdings in their 401(k)s plunged about $456 billion from 2000 to 2002.

A lot of employees want advice on which investments to choose. And while employers may not be able to help directly, many of them have partnered with advisory firms that offer advice or suggest asset allocation models on the plan manager’s Web site.

Your employer can tell you a great deal about the plan. First, review what type of investments are available. Your employer may have added new funds in the past year. Then, figure out how much you can contribute. The 2001 tax law changes increased the contribution limit to $12,000 dollars this year, plus you can get a catch-up contribution of $2,000 if you’re 50 or older.

Another key point is the employer match: Determine the level your employer will match your savings, and contribute at least that amount.

If you don’t want to hire a financial planner, and want to choose your own investments, there are several Web sites that can help. Check out the CNBC on MSN Money retirement planner that’s powered by a company called Mpower. You can add information such as your spouse’s income and the accounts of others that you’re handling. The service costs $20 a year.

For $11.95 a month, Morningstar, the mutual fund research company, has an advice service called ClearFuture that gives advice on what to buy as well as access to its analysts research reports.

If you’re willing to pay a little more financialengines.com estimates your chance of reaching your retirement goals and has lots of charts that will help you compare your accounts and investment strategies. That costs $39.95 a quarter.

© 2012 CNBC, Inc. All Rights Reserved

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