5 Steps for a Retirement Savings Tune-Up

Written by , March 25, 2014

5 Steps for a Retirement Savings Tune-UpLike any other personal finance goal, getting to retirement with a healthy nest egg requires long-term planning and effort. But the plan you might have come up with early in adulthood might no longer be the best way for you to reach your retirement savings goals.

It’s important to remember that you need to revisit your long-term financial plans from time to time, and make changes to that plan if necessary. Fortunately, you may not need to start over from scratch – instead, you simply may need a retirement savings tune-up.

Here in some retirement advice on five steps you can follow to make that happen.

  • Figure Out Where You Are Now. The first step in your retirement savings tune-up is to determine where you are now. Calculate the total value of all your dedicated retirement savings plans. Include your IRAs, 401(k)s, and any accounts or assets that you have designated for retirement, even if they are not in one of those tax-advantaged plans.
  • Re-examine Your Retirement Goals. Next take a look at the financial condition you want to be in when you retire. Do you have a specific dollar figure as a savings goal? Is that goal still realistically achievable? Is it a number that you calculated based on your retirement lifestyle goals, or did you simply choose it at random? Readjust your target as necessary.
  • Evaluate Your Investment Mix. Part of your retirement tune-up should be to evaluate whether your current retirement investments are appropriate for your goals, age, and investment preferences. Be sure to conduct this evaluation based on your aggregate retirement portfolio. If you determine that you are overweighted or underweighted in any particular investment type, then look to make the necessary adjustments.
  • Prioritize. For many individuals, taking a fresh look at their retirement savings plans will result in having to reprioritize other areas of their lives. Perhaps your current level of spending on family vacations is holding you back from meeting your retirement savings goals. One of the big reasons for performing a “tune up” is to make sure that the goals you might have set a few years ago are still the same as what you have now.
  • Expect the Unexpected. The last step is somewhat open-ended; and it’s to be flexible and expect the unexpected. Regardless of the results of your retirement savings tune-up, things may change. The assumptions you might have made regarding your income growth, or financial setbacks that you encounter before retiring, might no longer hold true and therefore make it impossible to stick to your revised plan. To some extent you can guard against the potential negative impact by making sure your emergency fund is in good shape, and always maintaining adequate health and property insurance.
  • Throughout each of these tune-up steps, it’s important to be honest with yourself about your goals and your past savings behavior. An honest and realistic approach is the best way to reach retirement in good financial health.

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    4 Responses to “5 Steps for a Retirement Savings Tune-Up”

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