Learning about and staying apprised of a retirement plan might seem like one of those things better left to a financial advisor, but it doesn’t have to be as difficult as it sounds. According to an article on USA Today.com, “…various studies have revealed that the average 401(k) balance for a 65-year-old is estimated to be around $25,000, hardly enough to maintain one’s lifestyle after leaving the workforce.” The article goes on to note, “Moreover, many participants reportedly fail to review the selections in their plan or reallocate the portfolio, which may lead to long-term holdings that are inconsistent with their current risk tolerance and time horizon.”
In an effort to remain aware of my retirement plan’s movements, I’ve used a simple 3-step system that keeps me in tune with my retirement future.
The ‘sneak peek’
At night, I often find myself taking a few minutes after dinner to browse the Internet while sitting with the family watching television. While I don’t consider myself a big “tech guy” or investor, I like to get a stock market wrap up, which includes a quick check of my retirement plan fund.
This “sneak peek” so to speak just takes a few seconds while I type the ticker symbol of my retirement fund into a search engine which brings up the share value and the day’s movement higher or lower. It’s just a snapshot of performance, but gives me a quick idea of what’s happening with my retirement plan when I don’t have the time or inclination for more in-depth analysis.
Monthly net worth update
To pair my regular retirement plan review with other financial management aspects, I also do a check of it during my monthly net worth update. Seeing a total review of assets and liabilities on a monthly basis can help better understand my overall financial situation. Part of this involves updating my retirement plan total.
Not only is my total dollar value for this aspect of my personal finances updated but share total and value too so that I can see dividend growth and better understand how my retirement plan – and the various parts of that plan – move with the market and economy.
The quarterly call
The third part of my regular retirement plan is a more in-depth quarterly review. I don’t just look at totals, but at actual holdings within my retirement plan. By looking up the fund or funds held within my IRA, I can see a more detailed accounting of what comprises these funds.
Seeing individual stocks and bonds, in what amounts they are held, and what their individual performance has been over the past few months or even years can provide me with a better understanding of the details of my retirement fund. By seeing the actual “moving parts” if you will, I can see why sometimes, even though the stock market may have gone up as a whole for a particular day or week, my fund might have gone down due to a few volatile stocks or stock sectors.
In these ways, I can get a better feel for why my retirement account moves and acts that way it does without such an education being overly involved or time consuming.
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The author is not a licensed financial professional. This article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader’s discretion.