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One of the greatest features of your 401k is the fact that it offers you the opportunity to invest automatically. Once you fill out the paperwork, money flows straight out of your paycheck and into your investment choices, with no additional effort needed on your part.

The upside of that automatic investing is that if you've got a decent fire-and-forget-it strategy in your account, it can be an awesome way to build wealth without even realizing the effort it's taking. The downside, however, is that if you neglect your account for too long, you might find yourself years down the road with a portfolio invested in a way that no longer makes sense for you.

Why your 401k needs a financial checkup
If your 401k operates like a typical plan, it works something like this:

  • Your plan has a list of fund choices in different asset classes
  • You fill out a form indicating the total amount you'll contribute and the investments it'll go to
  • Those choices continue until the plan changes its fund offerings or you fill out a new form

Unless your life, career, and 401k are all completely static, your retirement investing needs will change as everything else changes around you. Giving your plan a checkup once in a while is a great way to assure it keeps up with your needs over time. You don't have to check it frequently, but it makes sense to check it:

  • At major work milestones (like raises or promotions),
  • At major life milestones (like marriage or the birth of your children), and
  • At least once a year, to keep up with changes in what you can contribute and where

For instance, in January 2015, the maximum a typical participant can invest will increase to $18,000 if that participant is under age 50 or $24,000 if that participant is 50 or older. If you'd like to increase your investment, the limits increasing in January provides you a great opportunity to do so -- but you need to fill out the form for your plan authorizing the increase to make it happen.

What can go wrong if you don't check on your 401k?
A well-oiled 401k can certainly help you retire successfully, but if you don't check up on it from time to time, it won't work as hard for you. For instance, in the late 1980s, the maximum you could contribute to your 401k pre-tax was $7,000 per year. If you had set and forgotten your 401k contribution back then based on those rules, you'd have missed out on the chance to get some serious cash compounding for you tax deferred over the past few decades.

Likewise, fast forward another few decades ... Will you really want the same asset allocation then that makes sense to you today? As you get closer to retirement, you may want to shift into more stable-value or income-oriented offerings as the certainty of your account levels may become more important than the growth potential other choices may offer.

Almost ironically, if your employer offers you a match, that too could be a potential problem in your 401k that you need to address. Many companies offer their matches in the form of company stock. While employee ownership can be great and you should never turn down free money, having too much in your company's stock puts you at risk of losing both your job and your savings if the company gets into trouble.

Your employer's stock may be a fine investment, and it's probably not a bad idea to have some stake in the success of the company. Still, if the company match comes to you in the form of company stock, you might quickly find yourself owning more shares of it than you should feel comfortable owning. Check your plan's rules on diversifying the company contribution and consider cutting back to a level that won't leave you in a lurch if the company should struggle.

Additionally, if your plan should change the funds available to you, you certainly need to check up on it. For one thing, the new funds your administrator automatically put you in to replace the old ones you lost may not be the same ones you'd choose on your own.

For another, if the plan automatically puts you in its cash-equivalent option when your former choices are no longer available, you lose the compounding potential that comes with investing. On the flip side, if your plan gets smart and offers you better, cheaper options than you had before, then you'd certainly want to take advantage of that opportunity.

Automatic investing is great -- but stay in touch with your money
Repeated, consistent investing over time can be a great way to build wealth, and the automatic investing provided by your 401k can be a superb tool to help you along your journey. Still, if you want to get the maximum benefit you can out of that 401k, you should check in on your money from time to time to make sure it's still doing what it needs to in order to help you meet your goals.