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3 Steps To Conduct A Retirement Plan Check Up

percentageOne of the best strategies to have a good retirement is to constantly review your plans. Do not think that after creating your retirement plan you can leave it like that and it will guarantee enough funds for you. These plans span over a very long time (especially when you start early) and a lot of things can change.

Most of the retirement contributions are done through investments and the market can change a lot over the years. You want to make sure that your contributions are poised to earn as much interest or profit by putting it where it can grow the most. It is a constant periodic review that you must make and it will help you understand the whole game all the more.

Why do you need to review your retirement planning strategies

There are many reasons why you need to review your retirement planning strategies over time. Apart from keeping tabs in the market, you need to update your knowledge when it comes to maximizing the growth of your funds. There are just too many factors to consider that are constantly changing. You have the inflation rate and the consumer prices that continually rise. You also have to understand that your priorities change over time and that can affect your future needs. Illnesses can happen that may have to be funded when you retire. You need to consider all of these things to make sure that you will not fall short on your retirement fund.

One of the reasons why you need to conduct a periodic retirement is to understand how the whole retirement planning can benefit you. A 2013 study conducted by Charles Schwab revealed that a lot of consumers are confused about their retirement plan. According to this study, a lot of consumers know the importance of planning for retirement but not everyone are confident that they can manage it correctly. Among the other findings include:

  • 6 out of 10 respondents use the 401(k) as their largest retirement saving plan.

  • 9 out of 10 say that they rely on themselves to save up for retirement.

  • More than 50% increase their contributions in the past 2 years.

  • 74% believe that their 401(k) have recovered faster than expected.

  • 52% view their 401(k) as more confusing compared to health care benefits.

  • 46% do not know what investment option is best for their specific needs.

  • 34% feel stressed when they have to make decisions about their 401(k).

  • 61% of respondents believe that they will feel more confident if they get the help of a professional.


Obviously, the confidence of consumers when it comes to their retirement plan stems from the fact that they are confused. When you have no idea what you are doing, you will really feel at a loss and that will keep you from making good decisions about your retirement plan.

How to review your plans for retirement in 3 steps

So how do you review your plans for retirement? A good question to answer first is when should you check your plan? Well it actually depends on how much free time you have in your hands. The more often you can check it, the better it will be for you. But if you do not have the time, a yearly check up of your retirement plan should work just as well. This is a very important task to do during your pre retirement years.

The more frequent you check your plan, the more you will understand it. So how should you conduct your yearly check up?

Step 1: See how your retirement plan performed since your last check up.

Get all your statements and the investments from your portfolio and see how they have performed since your last check up. If you conduct your retirement check up at the end of the year, it will just be in time for the year-end statements that you get from the mail. When you total all your investments, the first thing that you need to check is this: how much is your total retirement fund. Compare that amount with your end target. How far have you come? How much percentage have you saved up? Is it enough for you?

Then, you need to check the growth of that fund. Was it as big as you expected? If not, you need to compare the growth of your investments with that of similar investments in the market. If bonds are part of your retirement plan, you need to compare it with the performance of other bonds. If it performed as much as the others in the market, then you are on the right track. You need to analyze if your money will grow further in this particular investment. Try not to be too obsessed over a few points below the average. But if it did not grow in the same way as your point of comparison, then you know that you should put your money elsewhere.

Step 2: Check the fees involved in your retirement fund.

In most cases, investments require a certain amount of fees. These can be with the money manager who takes care of your mutual funds. Or it could be the commissions charged by your broker. You want to weigh the profit that you earn against the money that you spend to achieve that growth. This is even true with your 401(k) contributions. You can check out the fees through your Human Resources. Make sure that you get as low as you can when it comes to the charges. If not, try shopping around if you can get a lower one. If there are things that you know you are already capable of doing, then you may want to forego the professional help that leaks out money from your funds.

Step 3: Make new retirement plans.

When you have finished the two steps, you need to decide on whether you will continue with the plan  without any changes or you will make some changes. Will you invest more in the baskets that currently hold your funds or will you transfer them?

Another thing that you need to look into is diversification. For sure, some of your investments have grown more than the others. For instance, if your stocks did very well in the past year, then it may be carrying a bigger percentage of your retirement fund. You may want to balance your portfolio by shifting funds or reinvesting in other investment options. It may be time to venture into new markets. The bottom line is, make sure your risk is balance well in your various investments.

According to an article in Wall Street Journal, a research suggest that buying more stocks than bonds may be the best way to prepare for your retirement. In the past, experts say that as you age, you may want to invest more money in bonds because they provide more security for your money. The study revealed that people who grew their stock investments over time are more likely to get ahead when it comes to the growth of their money.

Of course, all of these suggestions should be filtered depending on your investing personality. If you are the aggressive type and your funds can deal with high risk investments, you may want to follow the advice mentioned in the Wall Street Journal article. Think about all of these and give your retirement plan a makeover.

Here is a video from National Debt Relief that should help you rearrange your budget to coincide with the changes that you will make on your retirement plan.

What To Do During Your Pre-Retirement Years

As we all age, out priorities change. In our 20’s, we are all focused on our careers and establishing our financial independence. When we reach our 30’s, we begin to see improvements in our work life and that allows us to shift our eyes towards our personal relationships and we begin to consider settling down. In our 40’s we may or may not have children but nevertheless, our priorities still change as we struggle with mortgages and other credits that we have accumulated in the past.

What To Do During Your Pre-Retirement YearsBut when we reach our pre-retirement age of 50, things start to slow down a bit and we are now faced with the prospect of our retirement. Most financial experts encourage young individuals to start thinking about their retirement while they are still young. In most cases, 20’s is the perfect time to start building a fund for retirement. Given the latest economic crash, it seems that preparing for retirement when you are in your 50’s may be too late – especially when you have a lot of debts to consider.

While you will not be able to build up the same amount of funds if you started out young, it is not too late for you to have a comfortable retirement. But the thing is, you have to act now. To not delay anymore and consider your options to have the most comfortable and convenient twilight years.

Don’t carry your debts in retirement

Before you can think about how much you need to raise before you retire, you have to look at your financial condition first. Do you have debts? If so, what is the total amount and how long do you expect to pay it off?

The only way to maximize your limited time and resources during your pre-retirement years is to get rid of the debts. To help with that, you may want to enroll in a debt relief program that will allow you to make the best progress in paying down what you owe. You have debt consolidation options that will help you complete payments in 5 years – at least for your unsecured loans. These programs will provide you with a restructured plan that will give you a lower monthly requirement and possibly a lower interest rate.

You also have the option to go for debt settlement that involves negotiating with your creditors. You will convince them that you are in a financial crisis. The goal is to propose a settlement amount that is lower than what you currently owe. If you pay this to them, that will pay only a percentage of your debt and the rest will be forgiven.

Get rid of most debts that you owe – especially the high interest ones. Pay down your credit card debts so you can maximize your money and save up for retirement. If you are still paying for student loans, you may want to see if you qualify for the loan forgiveness program of the federal government. For mortgages, see if a reverse mortgage is applicable to you.

What to consider before you retire

When you have dealt with your debts, there are other considerations that you need to take care of. All of this will be to determine how much you will need to save to give you the type of retirement lifestyle that you want.

Here are some tips to help you determine how much you need to raise.

  • List the retirement benefits that you can expect to receive. This includes your Social Security, 401(k) and other pensions. This will help you identify if there are any deficit to your expected expenses.

  • Get a full medical check up to spot any ailments that you may face in the future. See to a health care insurance package that you can use or any preventive measures that you can undergo to keep serious health issues at bay. Check the Medicare or Medicaid benefits that you are entitled to. Also, get a fitness program that will help you feel energized despite your aging physical body.

  • Think about where you want to live. If you still owe a lot in your current home, you may want to sell it and opt for a smaller home – since all the children should have moved out by now. Some people get an RV and tour the country. Some opt to live overseas – in a country where the cost of living is not too high.

  • Plan what you will do in your spare time. Retired individuals will have so much time in their hands – you need to think about what you will do when you stop working. What fun activities will you involve yourself into? Will you work on your hobby and earn from it? Any earning that you can project will probably be a good idea – but should not be as stressful as your corporate life.

Once you know how much you need to raise, it will be easier to map out your retirement plan. If you have the time and you have the savings to afford an investment, you may want to put a part of your money to help it grow faster.

There are online calculators that you can use to help you compute your retirement fund. The AARP site has a great retirement calculator. Bankrate has an asset allocation calculator and the Social Security Administration offers a benefit estimate calculator to help you anticipate the what you will get. Use these to get a better bearing of what your finances will be like when you retire. It is best to settle the important issues before you leave your pre-retirement years.

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