Most of us don’t look at our retirement account very often. The contributions come out of every paycheck, life gets busy, and it’s easy to assume everything is on track.
That’s exactly why a quick checkup is worth your time in any kind of market. October is Retirement Security Month, a designated month to focus on your long-term goals and update your plan. Here are the three things I’d look at this month.
How Much Are You Saving?
A common rule of thumb is to save between 12 and 15% of your pay to maintain your lifestyle in retirement. That number includes what you put in and any employer contribution you receive. But the right amount depends on when you want to retire, how long you’ve been saving, and how much you’ve already built up. Two people the same age can land on very different numbers.
Start by checking where you are today. Look at the percentage of pay going into your 401(k) or 403(b), then add any employer contribution on top. If you’re short of the 12 to 15% range, you don’t have to jump there overnight. Raise it in a manageable way that fits your overall cash flow plan.
How Should Your Retirement Account Be Invested?
Your investments should match your age, your time horizon, and your comfort with risk. Your time horizon is simply how long until you’ll use the money.
Markets go up and down. That’s a normal part of investing. At some point there may be a pullback or a correction, and your account should already be set up for it.
Whether markets are up or down, it’s easy to get comfortable and let inertia take over. Emotions can cloud your judgment about what prudent investing looks like. So, take a fresh look at how your account is allocated and ask whether it still fits you.
Why Beneficiaries Matter
A beneficiary is the person or people you name to receive your retirement account if something happens to you.
Industry data suggests only about half of retirement participants have a beneficiary on file. For the other half, the money may not go to the people they would have wanted.
This is one of the simplest items on the list, and one of the easiest to forget. Review it whenever life changes. Maybe you got married or divorced. Maybe you started a family. Any event like that is a good reason to log in and confirm your beneficiary is current.
None of this takes a financial overhaul. It’s a few small checks that help make sure your retirement account is working for you.
