1. Review your beneficiaries. When a major life event occurs, the last thing on your to-do list (if it even makes your list) is to update your beneficiaries. Your 401(k) and some other types of accounts (Traditional IRA, Roth IRA, SIMPLE IRA, SEP IRA, and life insurance policies) all have built-in estate planning features. Designating a beneficiary means if you pass away, the named beneficiary will receive the assets in the specified account without going through probate proceedings.
2. Give yourself a raise. Review your company’s match and profit sharing offerings. If your company is offering a 100% match up to 5% and you are contributing 3% to your retirement plan, you’re leaving money on the table. By increasing your contributions to 5%, you will get an additional 2% from your employer. It’s free money going straight to your retirement! You may be able to add an automatic annual increase feature to your account. Upon setting it up, your contributions will automatically increase and you may barely notice it.
3. Review your risk tolerance and investments. In our younger years we have time and energy on our side for a lot things. In this case, there is time for a financial recovery from events like the Financial Crisis and March 2020. Ask yourself these questions. How did those events affect your portfolio? How did they make you feel? Looking back, would you have done anything differently? Generally speaking, we can withstand more volatility as a younger investor, and as we age our portfolio’s volatility and projected risk should decline.
4. Review your financial wellness. The majority of retirement plan record keepers have financial planning tools on their websites. The software will ask when you want to retire, how much your anticipated budget during retirement will be, and how much you have saved. It will take in to account your balance within the 401(k) plan and how much you are contributing. You may be able to add other outside accounts too. The results will let you know how close you are to reaching your retirement goals under the assumptions.
We wish you a wonderful National 401(k) Day! If you would like a personal consultation, don’t hesitate to contact your BCS Wealth Management team.