One of the great things about retirement plans is that you sign up, get your automatic withdrawal and your matching contribution. And then forget about it, right? Well, not exactly. While you will probably do okay if you never look at your retirement account after getting everything set up, you could do better. That’s why, every year, you should take a careful look at those periodic statements and see what is going on with your retirement plan. When you reassign the holdings in your 401(k) or IRA, you will be able to get rid of the stuff that isn’t performing so well, and maybe add some investments that would perform better. Remember that your retirement is an investment, and you should look it over every so often to make sure that your money is working for you the best way it can.
Changing your investment allocations as you near retirement
The general rule of thumb for switching up your retirement plan is to change your allocations slowly as you get older. Starting when you are young, in your 20s or early 30s, is a great way to take advantage of retirment savings with more aggressive stocks and funds. This is because you have more time to make it up if something goes badly. And don’t worry if you don’t work for a company. You can still start a retirement account. Anyone who pays taxes (and their spouses) can open an IRA. This is great for the entrepreneurs among us. You always want to have some tamer, safer, bonds and mutual funds in your retirement account, but as you get closer to retirement and withdrawing, you should slowly switch you allocation so that your retirment plan investments are safer.