Many employers will soon take steps to make retirement investing easier. But to get the best returns, you can't just let your employer invest your hard-earned money for you. Take a stand by taking control of your own investment decisions.

Lawmakers and employers alike have long tried to figure out how to improve participation in so-called defined contribution plans, such as 401(k) plans. But relying on employees to take action proved unsuccessful. Last year's Pension Protection Act finally let employers take matters into their own hands, by automatically signing up their employees for 401(k) accounts. But it didn't specify how employers were supposed to invest their employees' money.

Those regulations have now come out. Instead of dumping employees into cash accounts with low returns, employers can choose from more aggressive defaults, including lifecycle funds, managed accounts, and balanced mutual funds that have a substantial fraction of their assets invested in stocks.

Do it yourself
It's great that more employees will have at least some money put aside for retirement. But there's no one-size-fits-all strategy. By taking just a few minutes to look over your 401(k) plan's options, you can make vast improvements over the default options.

Here are some things to look out for:

  • Save more. The typical amount your employer will automatically contribute for you is just 3% of your pay. For most people, that's only a fraction of the $15,500 maximum.
  • Take more risk. For younger investors, balanced funds don't have enough money in stocks. With time on your side, you should be willing to take more risk for greater long-term rewards.
  • Be more diversified. Many lifecycle and balanced funds own stock in mostly large U.S. companies. But as Robert Brokamp discusses in this month's Motley Fool Rule Your Retirement newsletter, adding different types of stocks can actually reduce your risk. Consider funds that include smaller companies such as Fairfax Financial (NYSE:FFH) and Frontier Oil (NYSE:FTO), as well as emerging-market stocks like China Mobile (NYSE:CHL) and PetroChina (NYSE:PTR).
  • Make better choices. Even if default investments comply with the law, they may not be the best options your plan offers. Using other choices, you might be able to put together a similar portfolio at less cost, or find a better fund to increase your returns.

Making the right choices can add thousands to your retirement nest egg.

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For free access to Robert Brokamp's article on diversification and much more, take advantage of a free trial of the Fool's Rule Your Retirement newsletter. From making the right investments to deciding when to start taking Social Security, you'll get all sorts of helpful advice.

Fool contributor Dan Caplinger has his own retirement plan now. He doesn't own shares of the companies mentioned in this article. China Mobile is a former Global Gains recommendation. The Fool's disclosure policy works with any plan.