How Healthy is Your Retirement Planning? A Four-Question Retirement “Check-Up”

Written by Jonathan R. Osborne, QKA on July 3, 2019

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How’s your retirement planning health? Have you given it a thorough “check-up” recently? While every individual’s situation is different, a common retirement guideline states that you should strive to be able to replace 70% of your annual pre-retirement income to maintain your similar lifestyle. More than likely, this level of income replacement will need to be achieved through a combination of savings, investments, Social Security benefits, pension payments and possibly even part-time work. If you need a “check-up,” and you’re curious to know that your current path is leading towards a healthy retirement, here are four questions to ask yourself this summer, with no waiting rooms or co-pays required.

1. Are you taking full advantage of your employer’s matching contribution?

If your employer offers a matching contribution as part the company’s retirement plan, make sure that you are contributing to the plan at a rate that ensures you receive the maximum matching contribution from your employer. Also, since this rate may potentially change over time, make sure you are always aware of your employer’s current matching commitment to you. You never want to leave any “free” money on the table simply because you were not fully aware of your employee benefits.

2. Do you have any previous 401(k) or IRA balances that you can rollover and consolidate?

According to recent studies, the typical worker age 25 or older will only remain at their current job for about five years. If you have held several different jobs over the course of your career, then chances are high that you have accumulated multiple retirement accounts. This summer, carve out time to locate your previous accounts and then consolidate them into your current employer’s 401(k) plan or your most current IRA. Consolidating your retirement accounts into one account will help simplify the tracking of your progress toward your retirement goal. As tempting as it may be to cash out of these older retirement accounts and treat them as an unexpected financial windfall, studies have shown that individuals who have done so have increased their projected retirement deficits by as much as 52%. Do your best to resist the urge to cash out of your previous retirement accounts, and think about the benefit of consolidating them into your current retirement plan account.

3. Are you over 50?

If you are over age 50 or are turning 50 in 2019, the IRS allows you to contribute annually an additional $6,000 “catch-up” contribution to your 401(k) plan, as well as an additional $1,000 to an IRA. Taking advantage of this additional contribution every year until you reach retirement can amount to a substantial increase in your retirement account balance and can move you significantly closer to achieving your retirement goal.

4. Have you created your “my Social Security account” at ssa.gov/myaccount?

After creating an online profile, this website allows you to see how much you’ve paid into Social Security to date and also estimates the future benefits that you will receive during your retirement. As previously mentioned, there are different kinds of contributions that, when combined, work together to help you achieve your retirement goal. While your 401(k) and/or IRA balances may constitute the largest portion of your retirement savings, knowing how much you’ll have in Social Security benefits will also play a part in reaching your overall retirement goal.

Once you’ve answered and addressed these questions for yourself, remember that regular retirement “check-ups” are an integral part of healthy retirement planning. You’ll be on your way to enjoying the retirement you envision for yourself by regularly evaluating your retirement plan.

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