Signs You Need to Adjust Your Retirement Plan

Your retirement plan is extremely important, and you’ll likely spend your entire working life building your savings up to a level that can sustain you through your retirement years. Unfortunately, even when you work hard and follow a plan of steady and disciplined asset accumulation, you might find that you aren’t saving quite enough.

This might mean a change in investment focus, or it might mean saving more to a particular type of retirement account than some other. You might even need to adjust your retirement timeframe or the type of lifestyle you anticipate having during retirement.

Here are some signs that it might be time to consider adjusting your plan.

• Change in Career or Expected Earnings. If you have a change in your career status or income, you may need to adjust your retirement plan. Because moving to a new job or career can potentially have such a significant effect on your retirement plan, some individuals consider impact when deciding whether or not to make the change.
• You Have a Change in Your Family Situation. A marriage, the birth of a new child, or even a divorce or death in the family can affect your retirement plan needs. It’s always worth trying to plan ahead for these types of changes, and possible ways you can adjust your retirement plan accordingly.
• You’re Overweighted in a Single Investment. If you’ve become overweighted in any single investment type, you may need to adjust your portfolio, as well as your retirement plan going forward. Even though most investors are familiar with the need for diversification, it can be easy to find yourself with an undiversified portfolio. For example, if your 401(k) plan provides you with a discount or preferred pricing for purchasing your company’s stock, you may find yourself too much of your portfolio in a single stock.
• No 401(k) Employer Match. In the wake of the recent financial industry meltdown, many employers retooled their sponsored retirement plans to no longer provide for matching contributions. If you were previously participating in such a plan and maxing out your contributions, this may now mean that you’re losing out on an additional $5,000 of retirement savings a year, or perhaps even more. The loss of this amount of retirement assets over time can require you to adjust your plan to make up for those lost funds.
• Your Employer Doesn’t Offer a 401(k) Plan. When you change jobs, you will be subject to whatever retirement plan your new employer offers. Unfortunately, not all employers offer 401(k)s or other tax advantaged plans. In fact, some employers offer nothing at all. If you’ve moved to a new job with a less valuable plan than your old one, you likely need to adjust your overall retirement planning to make up for it.

While you don’t want to spend time every day thinking about your retirement, it’s probably a good idea to get into the habit of checking in at least a few times a year to make sure you’re where you want to be.