Investment Basics: A 401(k) Checkup

Investment Basics: A 401(k) Checkup

January 24, 2018

By Colin OShea Colin OShea
Securities Analyst  

Winter is a great time of year to review your retirement account. For one thing, it’s tax season. So you’re already thinking about money. Plus, life is generally less hectic in winter. Before the pace picks up, spend some quality time with your 401(k).

Check the Big Picture

Grab your latest statement and check your balance. Are you saving enough? You can do a quick check by estimating how much income you think you’ll need for a year of retirement. Then, subtract amounts you anticipate receiving from other sources (Social Security, payments from a pension plan, etc.). That will give you a rough estimate of the savings you’ll need to cover one year of retirement. To project the total savings you’ll need, you’ll have to consider the number of years you expect retirement to last, inflation, and other factors.

Consider Your Contributions

If it looks like you should be saving more, increase the amount you’re contributing to the plan. For 2017, the tax law limit on contributions is $18,000. If you’re age 50 or older and the plan allows, you can make additional “catch-up” contributions of up to $6,000.

Look at Your Lineup

If there’s been a major life change (birth, death, marriage, divorce, etc.) since your last checkup, you may need to change your asset allocation — the percentages of your portfolio that are invested in the different asset types. Your asset allocation should always fit your risk tolerance and investing time frame.

Even if your targeted asset allocation is the same, investment performance can change your portfolio’s actual allocation over time. When that happens, you may be exposed to more or less risk than you intended. If the percentages in your account have drifted, it might be time to rebalance.

Consolidate Your Accounts

If you have more than one retirement account — a 401(k) from a past employer or one or more individual retirement accounts (IRAs) — think about consolidating. Managing your retirement assets might be simpler if they’re all in one account. Contact your Security National Bank Wealth Managment advisor for more information.

About the Author

Colin O'Shea

Colin O'Shea is a Securities Analyst within the Wealth Management Division at Security National Bank, where researches and analyzes assets and trade securities and helps develop investment strategies. O'Shea holds a Business Administration Degree from Morningside College, and he is a veteran who served in the U.S. Army for 12 years.