Don't know how to do it? Read this blog or hundreds like it, or read Millionaire Teacher by Andrew Hallam or The Elements of Investing by Malkiel and Ellis. These books will take you two weekends, at most, and will put you on the aforementioned path.
But how do you know if you have a good 401(k)? One thing you might want to do is visit www.brightscope.com where you may find your company 401(k) listed and rated.
Another approach is to read
7 Clues That Your 401(k) Plan Sucks by Robert Berger.
Incidently, his website Dough Roller is one of my favorites that I check weekly for the articles he lists!
In this article he wrote for Daily Finance, Berger has the following important points to examine on determining the quality of your 401(k):
- employer match - in just about every instance, a match should be taken advantage of. How do you find if you have a match? Ask Human Resources or look at a recent statement. Statements will have "employee contribution" and "employer contribution"(if any) listed.
- Roth 401(k) - if you have a Roth 401(k), it is good; and consideration should be given to using it. Know that you won't get the upfront tax break for using it; but, going forward, you'll never worry about taxes again (assuming Congress doesn't change the law ;).
- Index Fund offerings - generally, if you don't have low-cost index fund offerings, then you should limit your contributions to the company match and use an IRA elsewhere. If you aren't sure of what a low-cost index fund is, read the above mentioned books. If you have low-cost index fund offerings (example: Fidelity Spartan Funds), then your path to a successful retirement is straight forward. Use them to the fullest extent allowed!