Retirement: Here's how often you should check your 401(k) account

BlackRock Retirement Solutions and Head of LifePath Global Head Nick Nefouse joins Yahoo Finance Live to discuss planning for a retirement amid market volatility, checking your 401(k) account, and why Gen Z is saving more for retirement.

Video Transcript

BRIAN SOZZI: Welcome back to “Yahoo Finance Live.” Today, being the first Friday after Labor Day, marks National 401(k) Day. With all the economic hardships taking a toll on Americans planning for retirement, it can be a stressful time. Here to share some perspective on being prepared for retirement is Nick Nefouse, BlackRock’s global head of retirement solutions and head of LifePath multi-asset strategies solutions. Good to see you here this morning. So what are some top advice you should– investors should be doing here on National 401(k) Day?

NICK NEFOUSE: Yeah, good morning, and thank you for having me. I do appreciate the time. So, normally, this is a day where we would prompt people to check in on their retirement plans. And this year, we acknowledge that it’s probably a more stressful experience given what’s happened in the market. But there’s a couple of points that we would continue to make.

The first one is saving for retirement is a long-term process. This is a long journey. So we wouldn’t want people to make major changes because of six months of returns in the market. This is also not the first time markets have been volatile, nor will it be the last.

So you see this in a lot of our older investors. They’re more accustomed to these types of selloffs in the market. So the last point that I would make is this always goes back to the old adage of time in the market instead of timing the market.

JULIE HYMAN: I love what you said at the top about checking your 401(k) because I feel like so many people are just don’t want to look at it right now, right? Oh, now Sozzi’s gonna look at his on his phone right now. When people are thinking about their strategizing around retirement, I think most people do sort of set it and forget it, right? So how often do people need to check in on their strategy? How should they be thinking about remaking it once in a while?

NICK NEFOUSE: Yeah, it depends on what their strategy is how often they should check on it is the way that I would focus on that. So for us, we try to focus on our target date funds, like LifePath, the product at BlackRock that we look after. Most of the savers through retirement plans are going to be invested in a target date-type fund.

And these are very simple portfolios. They’re age-based. They’re diversified. They evolve with you over time. So it takes a lot of the guesswork out of that.

So what we would say is check in on it, more so not on the investments specifically, but check in on that you’re on track for the right amount of savings you have over your lifetime.

BRIAN SOZZI: My 401(k) is not looking too pretty. I quickly close the tab. It’s not looking good. But what mistakes should people be avoiding in this environment?

NICK NEFOUSE: Yeah, you know, Brian, it’s interesting. The way that I would describe this is even though the markets are down, because you’re still saving, because you’re still way early in your career, you still have time to make this up. And your savings is gonna drive a lot of these returns over the long run.

So the mistake that we see people make is they might get scared because a 401(k) is down, and then they sell. And we find this often with people where what we encourage them to do is to not sell. We encourage them to stay in for the long haul.

JULIE HYMAN: Now, LifePath, which you’ve alluded to, focuses on target date funds, if I’m not mistaken, which–


JULIE HYMAN: –really have gained a lot of traction. Is it possible to overdo it when it comes to target dating?

NICK NEFOUSE: As long as you’re in the right age-based fund, I would say no. Sometimes, we find people that will own multiple target date funds. So if you’re buying the right age-based fund, the whole idea of a target date fund is that you don’t have to make a lot of changes, that we’re gonna take care of most of the investing for you.

BRIAN SOZZI: Nick, good point. I like how you still pointed out I am, in fact, young. But realistically, there are people a lot younger than me. So what advice would you give them if you’re 21, 22, you’re just starting out in your career? What should they be doing?

NICK NEFOUSE: Yeah, it’s a great question. The first one is save more. Whatever the amount that they are saving, save more. We released a survey a couple of weeks ago. And what we actually found was Gen Z is saving quite a bit. They estimated about a 14% savings rate for Gen Z.

So they are saving more than we see in other generations. But it’s really engaging with your HR departments if you have a 401(k) plan in hitting that company match. We find a lot of investors will be in 401(k), but they’re not saving to their company match. And this is really free money for the young investors. And as I said earlier, it’s about this time in the market in a very long-term journey, not a six-month journey.

JULIE HYMAN: I want to linger on that point for a second, Nick, that Gen Z is saving more. I mean, that’s sort of surprising. I mean, I guess it’s surprising that any younger generation is saving more. Have you guys done any research into what is driving that?

NICK NEFOUSE: Yeah, and again, the research– the way I would say this is, I think we’ve told people to save for a very long time, and I think it’s settling in. And I also think it’s with the lack of pension plans going forward. These generations don’t have pension plans, nor does, really, many millennials or Gen Xers.

So what you find is that you’re gonna be on the hook for your own retirement. Therefore, we think more people are using savings is a strong lever to build their retirement, which we haven’t seen in previous generations.

JULIE HYMAN: Yeah, and I guess, also, you can argue this is the generation that really grew up amidst the financial crisis, right? So that certainly has an element on one psyche when it comes to being a motivation for saving. Nick Nefouse, thank you so much, BlackRock’s global head of retirement solutions and head of LifePath multi-asset strategies solutions on this 401(k) Day. Thanks so much, Nick.

NICK NEFOUSE: Thank you.