Why You Should Perform a Checkup on Your 401k

Written By Mary Beth Eastman
Last updated July 26, 2019

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July 25, 2018

Simple. Thrifty. Living.

Regular investment into your retirement account is one of the best ways to make sure you have assets available to you at the end of your working life. However, just sticking to “set it and forget it” can cause you to lose out on some smart investment strategies that can help you to gain more retirement income and pay less in fees. If you are experiencing changes in your life circumstances or financial health, consider reassessing your 401k.

Your 401k is housed with your employer, so when you change jobs you have to make a decision about what to do with it. This is an ideal time to reassess your overall financial goals and how you want to allocate your retirement investments. If your new employer has a different matching scheme or series of benefits, you may be putting away more or less than you have in the past, and should look closely as to how that affects your future financial picture.

If you get a raise, you may or may not want to increase retirement contributions. More money comes with another series of financial results, such as higher taxes. Overall, you want to balance your needs for retirement with your needs now and in the not-too-distant future. While for some maxing out the 401k is ideal, others want to place more money into emergency funds, capital investments, or other retirement vehicles such as IRAs.

Certain triggering events change every aspect of your life, including your finances. Getting married, buying a house, welcoming a new baby, losing a spouse, and becoming a caregiver to aging relatives, are all examples of life-altering circumstances that directly impact how much money you have. If you are facing a sudden uptick in expenditures or responsibilities, you should look at whether your 401k portfolio is performing at optimal health for your situation.

For most people, simply getting into the habit of checking up on the 401k is quite sensible. While it’s true most investments perform best over an extended period of time, the best robo-advisors, such as Blooom (that’s three “o”s) can help you to determine on a periodic basis whether you have the right mix of assets in your 401k. Then you can decide whether to make changes or stick with the status quo.

With any investment strategy, it’s always best to stay informed and know all of your options. You only have one retirement, but you have unlimited ways to plan for your future financial health. Don’t be afraid to learn about what else may be on the horizon.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

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