Business acumen | Self-Check Your Retirement Plan – Times-Standard

If you have an employer-sponsored retirement plan, such as a 401(k), 403(b), or simple IRA, consider yourself very lucky. They are an excellent professional advantage that is too often taken for granted. Company contributions and profit sharing can make your retirement planning opportunities even more optimal. But to get the most out of your retirement plan, you need to make proactive decisions to ensure your financial peace of mind.

Are you saving enough?

One of the main determinants of the success of your retirement planning is the amount of savings you put into it. So when was the last time you reviewed your personal contribution level? It is not uncommon for an employee to set aside three to four percent of their gross salary to receive the employer’s maximum matching contribution early in their career. When you’re just starting out, sometimes that’s all you can afford. But too often, employees forget to adjust their contribution level upwards as salary levels increase. Typically, you ultimately want to save around 20-25% of your gross income, including employer contributions, as soon as possible.

Are your investments suitable?

If you have a retirement plan such as a 401(k) or 403(b), you likely have what’s called a “default” investment option. This means that if you sign up to participate in a business plan, but don’t make an investment choice, you are invested in a ‘one size fits all’ category. Often, this default investment is suitable for the average employee in terms of age, income and risk tolerance. But what if you’re not average? You might be investing too conservatively or aggressively, which probably won’t do you any favors in the long run. Some plans offer target date funds, which are designed based on the year an employee plans to retire. These can be useful, but again, they are not designed to suit you specifically. Speak to your plan’s investment manager for help determining the best investment solution for you and your retirement needs.

Are your beneficiaries up to date?

This one may surprise people, in my experience. Perhaps you have a trust or a will (and you should!) direct the transfer of your assets when you die. What many people don’t know is that certain assets, including those in your company pension plan, are not automatically transferred according to your estate planning documents. Your retirement plan documents include beneficiary designation forms that dictate the distribution of your retirement savings upon your death. In other words, don’t rely on a will or trust to maintain the wishes of the beneficiaries of your workplace pension plan. This can really come as a shock to current heirs where past divorce or disinherited former beneficiaries have been involved. Without an update to your designated beneficiary form, outdated intentions may still be alive and well!

In conclusion, a retirement plan should never be viewed as a “set it and forget it” investment account. As your life planning and investment needs adjust, your retirement savings may also need some attention. Be sure to stay actively and regularly involved in your retirement accounts. After all, aside from careful investment choices and contribution levels, time is a major ingredient in successful investing. Don’t wait until it’s too late to get the most out of your retirement plan.

Jeremy Sorci, MBA, CFP, AFIM is a financial advisor for Premier Financial Group. You can email him at jeremy@premierfinancial.com.


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