Setting anything to automatic has its good and bad points. A 2006 law designed to increase retirement savings allows companies to auto-enroll employees in 401(k) plans: A closer look reveals some interesting pros and cons.

First, the upside: Auto-enrollment has definitely brought more people into the system. Approximately 57% of sizable companies now use auto-enroll and report participation rates above 85%. Let's be honest, millions of people might not have saved a cent if they had to proactively opt in to their 401(k) plans. Some plans even allow you to automatically increase the contribution amount each year. That's a smart move and leads us to the potential downsides of auto-enrollment.

Your employer is picking the default auto-savings rate for you, and they often pick 3%. If employees had to act on their own accord, some analyses reportedly indicate people would chose to save at higher rates. Employers say they keep their automatic rates relatively low to avoid having people opt out altogether -- though some consumer advocates allege their real reason is to keep their own contribution costs down. Either way, auto-enrollment likely means you're not being as aggressive about retirement saving as you could be. In addition, it's important to remember having a 401(k) -- auto-enrolled or not -- is no substitute for a comprehensive retirement plan. There's a tendency to think, "Ah, it's all taken care of." If only it were that easy.

My take:
Be grateful if you have a 401(k), especially if your employer matches some of your contribution. The days of defined pension plans are over, so this is this best shot many of us have to put money away systematically. If you were auto-enrolled, take another look at your 401(k) and see if you want to adjust the contribution upward now or an a go-forward auto-escalation basis.

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I had a 401k for over 20 plus years and it is amazing how much your money can grow. One has to read about certain investments and don't get into too risky investments if you cannot stand the flucuations of the market. Those that may have lost money probably were not very knowledgeable or did not monitor your investments. It was more than worth it to have a 401k. When the market dipped bad around 2005 or 2006 my investments when down considerably but I did not panic and sell. I held on to them and I have recouped all of that I would have lost if I did sell at the drop of the market. You have to be patient and invest in only quality investments.

July 21 2011 at 5:38 PM Report abuse rate up rate down Reply

401 Ks are nothing more than a giant piggy bank waiting to be stolen by the very people who run them just like they did just a short time back. Yes you can make money but if you are not careful you can lose it over nite. The game is riged by wall street and we don't have a chance they stole it once and will do it again. I know alot of people who lost and will never recover.

July 21 2011 at 12:52 PM Report abuse rate up rate down Reply

My 3 cents-I made before tax contributions to a 401-K for 26 years with my employer a large regional bank. Unfortunately they got involved in mortgage derivatives and when the market crashed it took my 401-K with it. Im not to keen about 401-k's. A friend put his in CD's and while interest rates are not what they were 20 years ago he still hasnt lost principal.

July 21 2011 at 9:32 AM Report abuse rate up rate down Reply