Jan 19
Take the Temperature of Your Retirement Plan
January 19, 2023
Once a year, use this checklist to help you assess the state of your retirement planning.
A yearly physical makes sense, even for healthy people. A detailed physical exam can alert you to potential medical problems before they develop into something more serious. It's much the same with your retirement plan: Taking the time once a year to review your plan can help you identify issues that could have an impact on your future financial health. Here's a checklist to help you assess the state of your retirement planning.
Review Your Contribution Level
Can you increase the amount you are contributing to your retirement plan? All things being equal, the more you contribute, the more money you will have available for your retirement. While it may be difficult to save more for retirement now, even a small increase can have a meaningful impact over the long term. If you receive a pay raise or bonus, consider allocating a portion of the extra income to your retirement savings by increasing your plan contribution percentage.
Measure Your Temperature for Risk
How you spread your investment portfolio among the basic investment categories -- asset allocation* -- could have a substantial impact on the growth of your retirement account. Historically, stocks have delivered higher long-term returns than bonds or cash investments, but investing in stocks and stock funds** also comes with a greater risk of loss.
When deciding how to allocate your assets, you need to assess honestly your willingness to take on investment risk. In other words, how would you react if your retirement portfolio were to lose value? Consider these factors when answering:
- Your current and expected future income
- Any other savings and assets you may have
- When you expect to start using your retirement savings