Your Keys to Retirement Planning Success
Employees often ask what they should be doing in their retirement plan to reach their goals. We encourage you to follow these easy steps to help you achieve success:
1. Diversify
We’ve all heard this again and again from financial planning experts. Many investors, including those in retirement plans, may concentrate their account balances in just one or a few funds they believe will perform well, or are very safe. Putting all of your eggs in one basket is not a strategy for success since you are essentially betting on only one economic scenario. Fortunately, among your retirement plan fund options, you have access to portfolios that are invested in a diverse mix of assets. By choosing one of the wealth advisor managed portfolios or one of the target date funds you are invested in a diversified portfolio.
2. Don't Trade Your Retirement Account
Investors get scared during market volatility and when the market is dropping, and conversely become overconfident at market highs. Resist the urge to sell all of your equities when you are worried about the market. On the other hand, when equities are reaching new highs, you should not transfer everything to them, as this is when they are most expensive.
3. Keep Your Money in the Retirement Plan
You work hard to save. You may scrimp, deny yourself various luxuries or delay purchases in order to build your retirement account. If you should change jobs, resist the temptation to cash out your account. Taxes and penalties can reduce what is received from these distributions by 40 percent or more. By spending your retirement savings now, you reduce the growth and potential accumulation at the time of retirement.
4. Keep Saving - Always!
You may stop saving for a variety of reasons: the loss of a job, saving for a home, car, marriage, etc. Also, when the equity markets fall, you may panic and stop saving because you believe it is a bad time to invest in the market. Lower your contribution rate if necessary, but try not to drop your contribution rate to 0 percent.
5. The Most Important Factor Is...
We are often asked, “What is the most important thing I need to do to build the account balance I will need at retirement?” Can you guess what it would be? It’s not your asset allocation, what funds you invest in, the cost of your investments, or how they perform. Although these are all important components of success, none of these is the correct answer. It is: HOW MUCH YOU SAVE. Nothing matters more than this!
Aldrich Wealth LP helps our clients protect and grow their financial assets for the future, by helping them make smart decisions today. If you would like assistance in determining your retirement needs, please call Aldrich Wealth at 888-299-3102 to speak with a financial advisor.
