Retirement plan auto-enrollment can be great — or it can backfire

They know all about inertia in the retirement plan industry. Only they try to use it to help you. Their thinking goes like this: People who use the company savings plan don’t want to be bothered and they don’t want to make too many decisions.

So they make the choice for you. A lot of companies use something called auto-enrollment to put you in the 401(k) plan. Voila! You are saving for retirement and you didn’t have to lift a finger.

Some plans even have an automatic increase feature. That means you’ll be contributing a little more each year. Again, no work at all for you.

But just like sitting around and watching TV, which we all know is not healthy in the long run, taking a sit-back-and-do-nothing approach to your retirement plan can also backfire.

The best advice from two pros at Voya Financial, which administers 401(k) plans, is pay attention to your plan at least once a year.

According to research from Voya, you have to do three simple things to win at 401(k) saving. First, be in the plan.

You’re unlikely to reach a successful retirement someday if you don’t get started, and the sooner, the better, says Rick Mason, head of behavioral finance, at Voya.

If your company puts you in automatically, that’s great. Problem solved, at least for now.

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