Is it time for a (retirement) tune-up?
Many things in life require regular checkups—our cars, our homes, even ourselves. Financial plans need regular care, too, especially when it comes to retirement.
“It's important to do, at a minimum, an annual checkup on your retirement readiness,” says Stanley Poorman, CFP®, a financial professional with Principal®. “This allows you to adjust things like your asset allocation and funding to help you stay on track for one of the largest goals you'll save for—retirement.”
Is your retirement account in need of a little TLC? All it takes is a quick review once a year to see if your saving strategy is still in line for the future. These questions can help you get started.
Are you on track?
You likely have at least a decade of retirement savings under your belt. And that’s great! But as people live longer, our money needs to last longer. Consider this: Social Security was created in 1935, when the average life expectancy was just 65.1 Today, we could spend 20 to 30 years (or even more) in retirement.
Our Retirement Wellness Planner can give you a quick snapshot of how much income you may need. It factors in your current retirement savings, your age, your income, your estimated Social Security benefit, and other factors to show you where you stand.
It can also identify potential gaps. If that’s the case, you can look for ways to increase your contributions, or consider catch-up contributions if you’re 50 or older.2
Has your risk tolerance changed?
When you started saving for retirement, you may have felt pretty comfortable with risk. But if retirement is getting closer, a more conversative approach might feel like a better fit.
Take this short quiz (PDF) to see if your investment strategy could use an update.
Have you rebalanced your investments recently (or ever)?
Over time, investment options perform differently. Your original mix of investment options can get out of whack—so you could end up with more (or less) risk than you want.
Some retirement plans, like a 401(k), offer options for automatic rebalancing. If your plan doesn’t have this option (or you didn’t elect it), rebalancing at least once a year resets your investment balances to the original mix you chose.
Could you consolidate your retirement accounts?
It’s common to have several different retirement accounts—a typical example is 401(k)s from former employers. Having multiple accounts can be overwhelming and make it harder to clearly see if you’re on track to meet your investment goals.
Combining your accounts into one can help simplify the process and give you a better feel for how your progressing towards your goals. A common option is rolling your accounts into an IRA or into your current employer’s 401(k) plan.3
Your retirement savings is one of your most important assets. By adding it to your list of annual checkups, you can help ensure it stays healthy for years to come.
Take the next step:
- Use our Retirement Wellness Planner to see if you’re on track for retirement.
- Consider consolidating your retirement accounts or rolling them into a Principal IRA. Learn more about the available options.
- Talk to a financial professional about your retirement saving strategy. If needed, we’ll help you find one.
1 Social Security Administration, https://www.ssa.gov/history/hfaq.html
2 Contributions are limited to the lesser of plan or the IRS limit as indexed. Some plans may not allow catch-up contributions to the plan.
3 You should consider the differences in investment options and risks, fees and expenses, tax implications, services, and penalty-free withdrawals for your various options. There may be other factors to consider due to your specific needs and situation. You may wish to consult your tax advisor or legal counsel.
Investing involves risk, including possible loss of principal.
Asset allocation and diversification do not ensure a profit or protect against a loss.
The Retirement Wellness Planner information and Retirement Wellness Score are limited only to the inputs and other financial assumptions and are not intended to be a financial plan or investment advice from any company of the Principal Financial Group® or plan sponsor. This calculator only provides education, which may be helpful in making personal financial decisions. Responsibility for those decisions is assumed by the participant, not the plan sponsor and not by any member of Principal®. Individual results will vary. Participants should regularly review their savings progress and post-retirement needs.
The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
Financial professionals are sales representatives for the members of Principal Financial Group. They do not represent, offer or compare products and services of other financial service organizations.
Insurance products and plan administrative services provided through Principal Life Insurance Co. Securities are offered through Principal Securities, Inc., 800-547-7754, member SIPC and/or independent broker-dealers. Principal Life and Principal Securities are members of Principal Financial Group®, Des Moines, IA 50392.
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