Two Important Reasons to Regularly Review Your Retirement Portfolio

Two Important Reasons to Regularly Review Your Retirement Portfolio

When was the last time you reviewed the investments in your employer-sponsored retirement plan?

If you’re like many, the answer might be that it’s been a while. Don't sweat it, now’s a great time to put a plan in place so you can stay up to date on the performance of your investments.

The frequency of your portfolio review process may vary depending on your investment strategy, lifestyle, financial goals, and preferred risk levels. However, just like you see your doctor for an annual check-up, it’s smart for anyone, regardless of age and investing strategy, to periodically review their investment portfolio with a financial advisor.

What to look for when reviewing your retirement plan portfolio

A regular investment review process can help ensure shifts within your portfolio stay within your comfort zone and you aren’t being overly exposed to unwanted risk. When evaluating your retirement plan portfolio, make sure you’re keeping these aspects in mind:

  1. Investments are aligned with your preferred risk tolerance.

    When it comes to retirement savings, managing risk is a key reason many investors make changes to their retirement investments. Maintaining a specific risk level based on your preference or your planned retirement age can seem counterintuitive; moving money from a high-performing but high-risk asset to a lower-risk asset may even feel like a bad choice. However, the decision to review your account to maintain your preferred risk tolerance is an important part of making sure your investments are protected according to your specific financial goals.

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    Your risk tolerance will often be associated with your age. For example, a younger worker in their may choose to put more of their monthly 401(k) contributions in aggressive, high-risk funds, since they have more time to recoup any losses before retirement while benefiting from higher potential returns. In contrast, someone near retirement age may allocate more to conservative, low-risk funds since they’ll be tapping into their accounts sooner.

  2. Costs and fees associated with investments are reasonable.

    Take time to review your portfolio, with the guidance and experience of a financial advisor for support, to help keep fees lower. Expense ratios alone aren’t a great reason to drastically shift your investment strategy, but tracking fees over time is a good idea for investors hoping to keep overall costs as low as possible.

    Reviewing your retirement portfolio regularly is just one of many ways you can build your financial independence and confidence.

    Adjust your investment strategies based on your goals, age, and risk tolerance for increased financial stability in retirement.

    Stay informed and follow useful guidance as you plan for retirement.

To learn more about how much you should save—and whether your investments are on track to cover your living expenses after you retire—check out our retirement savings resources.

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