Why ‘Set It and Forget It’ Isn’t Enough: What to Know About 401(k) Management Today

Your 401(k): A Powerful Yet Underused Tool

When it comes to retirement savings, few tools are as important – or as overlooked – as your 401(k). It’s often the largest account you’ll accumulate during your working years, yet it’s one of the least reviewed components of many financial plans.

Many people start with good habits: setting contributions, choosing an allocation or target date fund, and letting the market work over time. This is a smart foundation, but it’s not the whole story.

As your career progresses, your income increases, or your priorities shift, and your plan should adapt with you. That’s where the “set it and forget it” approach can fall short.

[According to Kathryn McGough, Wealth Advisor at HT|TC Wealth Partners, “Most people don’t realize how much of their wealth is sitting in a 401(k) – and how much more aligned it could be with the rest of their plan.”]

Why It Deserves  More Attention

Your 401(k) plays a bigger role in your net worth than you might think:

• In 2022, retirement accounts like 401(k)s ranked as the top contributor to household net worth, accounting for approximately 32% of the typical household’s assets, slightly ahead of homeowner equity (31%). [Source: 2022 Census Bureau analysis]
• As of Q3 2024, the average 401(k) balance at Fidelity was $132,300. [Source: NerdWallet, 2024]
• Responding about their expected primary source of retirement income, 58% of Millennial 401(k) participants cited personal retirement accounts, while just 6% pointed to Social Security. [Source: PlanAdviser, 2024]
• Among affluent individuals ($1-5 million in total net worth), retirement accounts make up approximately 62-63% of their wealth, especially in their 50s and 60s [Source: Wealthtender, 2024]

Despite this significance, most people rarely revisit their allocations annually, if that, review their plan lineup, or actively align this account with their broader financial planning goals.

Active 401(k) Management Is Now Possible

Historically, managing your 401(k) meant logging in, reading fund descriptions, and making educated guesses. Advisors couldn’t step in directly – leaving many clients to fend for themselves between financial planning meetings in a sea of investment options.

That’s changed. Today, with the right tools, financial advisors can actively manage your 401(k) while it remains in your employer’s plan. No rollover required.

This allows for:

• Professional rebalancing based on your evolving goals
• Alignment with your overall risk profile and time horizon
• Coordination across all your accounts – so your 401(k) isn’t siloed

When Should You Consider Active Oversight?

You might benefit from active 401(k) management if:

• Your 401(k) makes up a significant portion of your total wealth
• Your plan includes a broad menu of options that could be better optimized 
• You want more than a target date fund or one-size-fits-all solution
• You’ve changed jobs and have multiple accounts that should be consolidated and evaluated
• You don’t have the time or interest to monitor investments yourself
• Your fund lineup changes periodically and you’re unsure what to do
• You’re within 10 years of retirement and want to fine-tune your withdrawal and risk approach
• You want to confirm that the underlying assets of your 401(k) aligns with the asset allocation across the rest of your portfolio
• You want more clarity on how this account is contributing to your long-term success

Real-Life Impact

We’ve seen clients in their 40s and 50s realize their 401(k)s were significantly misaligned with their current risk tolerance.. Once we brought those accounts into the planning process, we were able to rebalance and unlock smarter portfolio-wide coordination.

Even younger professionals in their 30s are likely to benefit from active 401(k) management. Many are contributing regularly, but feel unsure if they’re in appropriate funds or missing out on important tax strategies. A quick 401(k) review can often lead to better outcomes over time – with very little effort required on their part.

Clients in their 60s and 70s – many of whom are already retired – can use active 401(k) oversight to their advantage as well. We’ve worked with individuals who assumed their accounts were “set” after retirement, only to realize they were still exposed to more risk than intended/needed or missing opportunities for tax-efficient withdrawals. By actively managing these accounts up to and in retirement, we can better align withdrawals with income needs, reduce tax drag, and help preserve assets for longer-term goals or legacy planning.

Better Integration = Better Outcomes

Your financial life is bigger than any one account – but your 401(k) shouldn’t be the blind spot in an otherwise strong plan.

With active management, this account becomes part of a larger, more connected strategy, helping you move forward with greater clarity and confidence.

Next Steps

You’ve worked hard to build your 401(k). Whether you’re early in your career, midway through, or approaching retirement, now is the time to revisit this account. Together we can explore whether it makes sense for you to incorporate your 401(k) into your comprehensive, proactive financial strategy.

Let’s make sure your 401(k) is supporting your vision – not just your age.

Reach out to our knowledgeable team today.