Schedule a once-a-year review of all your retirement savings account information to ensure you’re saving what you want and need to.
Quick takeaways:
When’s the last time you reviewed your retirement savings accounts?
If your answer is “I’m not sure” or “Never,” you’re not alone: Just 39% of Americans have a retirement savings plan in place so they can stop working when they want to. When it comes to those nearest retiring—age 55-64—58% say they don’t have retirement savings or aren’t sure if they are financially on track to hit their retirement goal.
No matter where you are on the planning spectrum, you can get started today on a regular review of important information. It will help solidify your next steps to help you reach your financial goals. Use this five-step list whenever it’s convenient for you—during open enrollment, after a raise or bonus, or at the start or end of the year.
Make a list of every retirement account you have—plans through your current employer, past employers, and other savings. Then gather these details:
- Account balance
- Contribution level
- Employer match on your current plan
Both contribution level and employer match are worth your attention on a yearly retirement status review. If you can, try to up your contribution level each year until you reach about 15% (even 1% a year helps).
If available, try maximizing employer contributions. If your employer offers matching contributions, review the terms to ensure you're contributing enough to receive the full match (it’s like free money).
A yearly check in on your retirement progress also includes a review of your investment asset allocation and fees. Your asset allocation is how your retirement savings are spread across different types of investments such as stocks and bonds, among others. Ideally, an investment mix reflects:
- Your risk comfort level or tolerance
- Your planned retirement date (generally, investments become more conservative as you near retirement)
- Your overall financial situation and goals
One common investment fund for many retirement savers is a target date fund. This type of investment option automatically adjusts the mix of investments based on your expected retirement year. If you're not saving in a target date fund, you may have to adjust your current allocation (see the next step).
Over time, some investment returns may grow faster or slower than others. This can change your original investment mix without you realizing it. When this happens, you might be taking on more (or less) risk than you planned. For example, if your target mix is 70% stocks and 30% bonds, but your investment fund’s performance has shifted your actual mix to 80% stocks and 20% bonds, rebalancing would shift the overall percentages and the way your investment funds are split back to that 70/30 target.
One option to do this is automatic rebalancing, which resets your investments back to your chosen mix on a predetermined timeline. Check with your financial professional on how to do this. If you’re a Principal customer, see the tip box, below.
If you have old retirement accounts from previous employers, you can put everything into just one account; it’s called consolidation. Some benefits of consolidating are:
- One (or fewer) account balances to monitor
- A clearer picture of your total retirement savings
- Potentially simpler investment management and rebalancing
- Easier tracking of your overall asset allocation
Not sure how to consolidate? Rolling your accounts into an IRA or into your current employer’s 401(k) plan is one common method. Learn all about your consolidation options.
Every plan should have your most current contact information, including a secure email and a mailing address. If not, log in or call customer service to change it. At the same time, review the beneficiaries on every retirement savings account. To change a beneficiary, you’ll need the person’s full name and date of birth. (Social Security numbers are a good idea, but not required by every plan.)
If you’re a Principal customer, you can update your personal details by logging in. Navigate to “My profile” for links to change email, address, and more.
How do you start planning your retirement income and budget? Our tools can help. Start with the retirement income calculator (login required). Adjust factors such as health, savings rate, and current pay to see your retirement income needs. (Use the link, or under your 401(k) account, click on “Personalized planning” then “Education hub”.) Then, use this detailed retirement budget worksheet to start tracking potential expenses once you stop working.
