Give Yourself a Retirement Review This Holiday Season

Give Yourself a Retirement Review This Holiday Season

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Do you have more “to dos” to complete than time available to get everything done right now? For many people with employee benefits like insurance, retirement, and legal plans, this time of year often is the re-enrollment period. Whether you are one of these employees, a business owner, or a retiree; no matter how busy you might be as the holiday season gets underway, take time to take care of yourself financially.

Consider giving yourself the gift of a few minutes sometime soon to review your retirement account beneficiaries, decisions, and features.

Review Your Beneficiaries
When you die, retirement plan accounts like IRAs, ROTHs, 401(k)s, 457s, and 403(b)s are designed to transfer directly to the people you designate as beneficiaries on the accounts. However, if you make a mistake with your beneficiary designation, your account could end up in probate, where legal procedures distribute your account to heirs. Here are some common beneficiary-related mistakes, and how you can avoid making them:

  1. Outdated beneficiaries: The wrong person is named to receive your account when you die. Prevent this by double checking your retirement account beneficiaries once a year and when you change jobs, (re)marry, and divorce.
  2. Forgetting to name alternate beneficiaries: In this instance, no beneficiaries are designated to receive your account if your primary beneficiary dies or is not able to receive the money. Avoid this by designating alternate beneficiaries.

Revisit Your Retirement Savings and Investment Decisions
When did you last review your retirement savings and investing decisions? While many investors understand the importance of starting to save for retirement, few investors regularly evaluate what they are doing and why. As a result, they may miss out on opportunities to review their progress towards realizing their retirement goals and fine-tuning their approach, where necessary.

Revisit your retirement savings and investing decisions at least annually, as well as when you experience a major life change. Here are some questions that you might find helpful:

  1. How much are you saving for retirement and why?
  2. Can you afford to save more? Should you?
  3. What positions do you hold in your retirement account?
  4. When did you choose your current holdings and how did you choose them?
  5. Given your current plans for retirement, do your investments continue to make sense? When is it time to re-allocate or adjust?

Understand Your Retirement Plan Features and Consider Whether They Make Sense for You
Different retirement accounts and plans have various features. Consider,
for instance:

  1. You have a maximum annual limit that you can contribute to a (ROTH) IRA in any given year.
  2. It is possible to make non-deductible contributions to your Traditional IRA.
  3. Some company-sponsored plans offer:
    • After-tax contributions in the form of a ROTH 401k.
    • In-Plan ROTH Rollovers (IRR) from the traditional (pre-tax) side of the 401k to the ROTH 401k side.

The extent to which you should take advantage of the unique features for your retirement depends on your situation. While some features may make sense, not all may be relevant for you.

Learn from Our Client Successes
Recently I helped a few clients* understand their latest company retirement plan choices and ensure that they continue to make the right decisions for their circumstances. Here are their stories:

  • Joy recently changed jobs. We discussed what Joy could do with her 401k plan from her previous employer as well as what retirement plan investment choices were available to Joy at her new company. After considering the options, Joy decided to rollover her previous 401k plan to her personal IRA so that her investments would be selected by my team and me according to her financial plan.
  • Randy learned that his employer was making available to all employees a new ROTH 401k. He had not been able to contribute to his ROTH IRA for years and wondered whether this new choice made sense for him. Randy and I reviewed the terms of the ROTH 401k opportunity considering his financial goals, cash flows, and tax rates. In the end, we concluded that enrolling in the ROTH 401k plan made the most sense for Randy’s situation.
  • New client Katie shared with me her current holdings in her company’s 401k plan. After reviewing her positions, my team and I concluded that Katie was invested much more aggressively at a higher level of risk than needed given her retirement plans, careful saving and spending behaviors, and other financial resources. Katie and I discussed her choices and she decided to reduce some of the unnecessary risk in her 401k and change positions as recommended by my team.

Two of the greatest gifts that you can offer yourself any time of year are awareness of your finances and intentional financial decisions given your available choices. If you would value an independent review of your finances and retirement plan, contact me for a complimentary financial consultation.

*Clients’ names and circumstances have been anonymized for this article

Caroline Wetzel is one of Natural Nutmeg’s 10Best Winners for Business/Life Coach. Caroline is a Certified Financial PlannerTM (CFP®) and Vice President, Private Wealth Advisor with Procyon Private Wealth Partners, LLC. Procyon Private Wealth Partners, LLC and Procyon Institutional Partners, LLC (collectively “Procyon Partners”) are registered investment advisors with the U.S. Securities and Exchange Commission (“SEC”). This article is provided for informational purposes only and for the intended recipient[s] only. This article may also include opinions and forward-looking statements which may not come to pass. Information is at a point in time and subject to change. Procyon Partners does not provide tax or legal advice.