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Is It Time to Review Your 401(k) Account?

Is It Time to Review Your 401(k) Account?

| May 21, 2018

Depending on what stage of life you are in, it may be time to review your 401(k) account. It's not uncommon for people to set up their account and let it be for a while without reviewing it, but circumstances in life can change often, which can change your goals as well. That's why I recommend checking in on your account. If you're a long-term investor, I recommend you review your account each year. If you are closer to retirement, however, you may want to check it more often to make sure your plan is healthy for transition. If you are wondering whether or not it's time to review your 401(k) account, ask yourself the following questions:

Are your assets properly allocated?

One mistake people commonly make is not properly allocating their investments because they either don't know which investments to choose or know which investments are right for them. Are you contributing too much into conservative investments? Are you investing too much into one stock? I recommend to diversify your investments to fit your time frame and risk. It's important to educate yourself on how each investment works to make sure it is the correct fit for you, either by researching them or speaking with your investment advisor. 

Are you contributing all that you can?

Have you or will you be receiving a raise? Have you recently paid off a debt (credit card, car payment, etc.)? Has it been years since you have increased your contributions? If so, you may want to consider contributing more earnings to your 401(k) account. One strategy is to move your new earnings once you receive a raise or pay off a debt to your plan as soon as possible. This way you don't find a way to spend that money somewhere else. If you don't favor that idea, then maybe it's time to just increase your contributions. At minimum you should be contributing enough to qualify for your employer's match contribution. Your advisor can sit down with you, find out what amount comfortably works for you, and discuss how that investment might pay off in the future. 

Have you gone through or are going through a life-changing financial event?

Have you inherited a lot of money? Were you recently diagnosed with a major medical issue? Have you recently lost a lot of money? While these events often can't be predicted, if they occur, it is important to keep your advisor informed so you can decide if adjustments need to be made to your account. 

Have your goals changed?

Both your short and long term goals should be reviewed every year. Take time to sit down and review your financial goals and calculate how much you'll need to save for retirement each year based on them. Review your current investments to make sure they align with your current retirement goals, including investments and assets outside of your 401(k) plan. If your goals aren't matching up or you feel like you are not on track, then it's time to speak with your advisor. 

No matter where you are in your retirement planning journey, it is never too early to start saving. Make sure to review your account each year to be sure you are getting the most out of your 401(k) plan.