An estimated 57% of workers have access to a 401(k), and while signing up for your company's plan is a good start, you'll be doing yourself a disservice if you simply choose an amount to contribute, set it, and forget it. Here are three signs that your 401(k) is in some serious need of attention.

Serious-looking man worried about his 401(k)


1. Your money hasn't moved from your plan's default investment option

When you enroll in a 401(k) plan, your contributions will typically filter into the plan's default investment option, which is frequently a lifecycle fund or a balanced fund. The good news about default investments is that the government has to approve them as acceptable choices for your plan. The bad news, however, is that yours isn't necessarily serving your needs.

For one thing, you could wind up paying higher fees than you'd expect (more on that in a bit). Furthermore, your fund's default investment option may not align with your risk profile, investment horizon, or ultimate goals.

While you do have the option to stick with your fund's default investment for the long haul, you're better off reviewing the different choices offered by your plan and finding the ones that better suit your investment style and needs. For example, you may feel the need to boost your returns (and increase your risk) by putting some money in an equity index fund. Most 401(k) plans offer a number of investment options that range from individual stocks to bond mutual bonds. And while your selections may be somewhat limited based on your plan, they should fall on varying ends of the risk spectrum.

Rather than resign yourself to your fund's default investment, read up on asset allocation strategies, think about your goals, and find a more suitable place to put your money.

2. You're clueless about fees

All 401(k)s charge general maintenance and administrative fees that cover the cost of running your plan. These baseline fees can easily equal 1% of your assets' value, which means that over time, they could eat away at your overall earnings. But while certain 401(k) fees are pretty much unavoidable, you can limit the extent to which you lose money to investment fees -- if you're willing to pay attention to them.

A NerdWallet study found that 92% of Americans have no idea what they're paying in 401(k) fees. If that sounds like you, it's time to take a closer look at your investments and get a better sense of what you're paying for -- and whether or not those fees are worth it. The Center for American Progress estimates that the average American worker who starts earning a median salary at age 25 will lose over $138,000 in lifetime 401(k) fees. Ouch.

If you're looking for low-fee investments, index funds are typically a good bet, because unlike actively managed funds, they simply seek to match the performance of existing stock indexes (like the S&P 500), and as such, their fees tend to be relatively low. Even better, index funds have been kinder to investors over the years than their actively managed counterparts. A 2015 Morningstar study found that from 2004 to 2014, index funds performed better than actively managed funds across almost all asset classes.

Of course, if you have reason to believe that a more expensive investment choice will better serve your needs, it could be worth your while to pay the higher fees. Just don't make the mistake of signing up without taking the time to understand how much you're paying and what you're paying for.

3. You haven't changed your contribution amount since signing up

For the past two years, the average U.S. employee has gotten roughly a 3% annual raise. If you've received a salary boost since signing up for your 401(k) but have yet to adjust your contributions upward, you could be missing out on a major savings opportunity.

Workers under 50 can currently contribute up to $18,000 annually to a 401(k). If you're 50 or older, that limit increases to $24,000. But while you might not manage to reach these limits, you should increase your contributions every time your salary goes up. In fact, if you've gotten a raise this year but your living costs have largely remained stable, there's no reason not to contribute your entire raise to your 401(k). You'll get an up-front tax break on that money, and it will serve the vital purpose of padding your nest egg.

Let's say you get a $3,000 raise every year for the next 30 years. (Of course, if you're like the typical worker, the amount of your raise will fluctuate, and ideally grow, year after year, but we'll use a static figure for simplicity's sake.) If you were to take that extra money, put it in your 401(k), and choose investments that generate an average annual 7% return, you'd have an additional $283,000 for retirement.

Your 401(k) could spell the difference between staying afloat financially in retirement and struggling to pay your bills, so don't make the mistake of ignoring it year after year. While you don't have to monitor your plan's performance weekly, you should check in once every quarter to see how your investments are doing. The more effort you put into your 401(k), the better it can end up serving your needs in the long run.