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3 Amazing, Free Financial Tools That Are Probably Included In Your 401k or 403b


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Did you know that 68% of Americans have access to a 401k retirement plan? And did you know that a lot of them - maybe even a smart cookie like you - aren’t aware of the awesome, free tools that are part of that 401k? For more on your 401k, check out this podcast episode too. As a certified financial planner and a money coach, I loooove financial tools that make it easier to optimize your money. What do I love even more? Financial tools that are free and are already included in your 401k or 403b plan!

401k & 403b Tools That Can Help You DIY Your Financial Wellness for Free


Auto-escalator

Auto-escalator gives you the ability to set an automatic increase to your contributions on a regular basis, whether that's yearly, bi-annually or sometimes as frequently as quarterly. Some plans only allow annual 1% increases and some of them even have a cap on how high of a percentage they can auto-increase up to, but other plans allow you to increase contributions all the way until you reach the annual limit.

While there can be some variation in terms of the specifics of how the auto-escalator works, a best practice (that is also super-easy) is to just increase 1% per year and schedule that increase to happen at the same time as any type of income increase that happens.

Are you thinking, “But we don't get consistent raises at my job”? I feel you - I worked the same job for five years with a set salary where no one got an increase! However, an increase of 1% is such a small amount of a given paycheck, it’s unlikely that you’ll notice the difference. The long-term impact, however, of saving just a little bit more over the years can equate to a six-figure or difference over long periods of time!


chart showing increased retirement savings
Image credit: PlanSponsorConsultants.com

Investing help


A lot of people don't realize that their 401k or 403b includes free investing education and there’s often even investing guidance built into the platform! Is it going to be as personalized as working with a qualified, registered investment advisor who takes into account all of your goals and your unique situation? Absolutely not.


But if you don’t need a financial advisor yet or you don’t meet their minimums, it’s helpful to know that you can probably get some decent, general investing information right from your 401k. In fact, companies that offer 401ks to their employees have a legal requirement to provide some type of guidance around choosing investments so the way most companies fulfill that duty is by offering these tools to help.

One common example is a tool called Financial Engines that will give you an evaluation of your investment allocation and can make suggestions for changes if needed. This may not be as helpful if you have a lot of investments outside of your 401k or if you have 401k money at an old job, but in many cases these tools allow you to add in other assets in order to generate a more inclusive suggestion.


Financial wellness benefit


I talk about this in my podcast here, but you might actually get free financial coaching through your 401k. The level of service and the type of information that you receive through your financial wellness benefit is going to vary greatly by the 401k provider. For example, people who have a 401k through Ascensus also have access to an AI-based financial coaching platform that will help them make a plan to address weaknesses in their personal finances such as debt management, budgeting, and even planning for college. Employees of JP Morgan Chase have access to one-on-one financial coaching provided by experienced CFPs who don’t sell anything.

While most financial advisors are focused on helping you pick investments, a financial wellness benefit will offer guidance, tips and tools for help with things like budgeting, debt reduction strategies, refinancing student loans, buying a home or even sometimes education funding strategies. I know, because I used to be a financial wellness coach!

Interestingly, people who utilize financial wellness programs tend to be more prepared for retirement: studies show that they actually save more for retirement, regardless of income or other factors.

Now there are some caveats or warnings or things to look out for, because not all financial wellness benefits are created equal. Some companies will call a tool like an account aggregation service or a student loan repayment benefit “financial wellness.” Those can be great tools, but they’re not going to provide the same level of insight and education and behavioral change as access to one-on-one coaches might provide.

Other financial wellness providers are actually the 401k company themselves who offer this as an add-on or even as a way to help companies fulfill their legal duty around education. They’ll obviously be biased toward increasing savings in the 401k plan, but getting people to save more for retirement tends to benefit both you and the provider, for the most part, so I wouldn’t be overly suspicious of this “hidden” agenda.

By and large, whichever financial wellness benefit program you’re part of, the focus tends to be on educating and improving day-to-day financial habits, something that most financial advisors don’t focus on as much but definitely something we all need to master.

The bottom line is that your 401k is so much more than just a place you log in to check your balance and (hopefully) increase how much you’re saving - take advantage of the free tools and services that come along with it!





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