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Review Your 401(k)

It's never too early to start planning for retirement. A well-planned retirement can spell the difference between comfort and struggle in your later years. Many employers no longer offer company managed pension plans, but rather provide 401(k) retirement plans that allow you to choose where your investment dollars go. It typically takes some effort to ensure maximum returns.

A closeup view of a crossword puzzle and plan with the words 401K and IRA.

What Needs To Be Done:

Your 401(k) needs to be reviewed to ensure proper allocation of your retirement funds. Be sure to consult a financial professional should you have any questions.

Why Do It?

  • Financial markets are constantly changing
  • Allows portfolio optimization
  • Enables risk exposure to be altered for improved performance
  • Aids tracking of investment growth/loss
  • Allows asset allocation changes from equities to low risk investments, like blue chip corporate bonds

How Often?

There are several schools of thought when it comes to rebalancing your 401(k) plan, according to the New York Times:

Rebalancing Options Definition
Automatic This is a standard feature of some 401(k) plans. This type of 401(k) plan will automatically rebalance at a given date. It is optimal if you have already set up the proper investment mix.
Indicator-Based This means whenever your statements reveal your 401(k) is down by a certain percentage—5 percent, for example.
Professionally Managed Online brokers provide professional review and rebalancing of your 401(k) for a fee. There are several low-cost services that will provide this for you.
Time-Based This means reviewing and rebalancing your 401(k) at specified time periods. For example, mutual fund giant Vanguard recommends that you review your 401(k) once or twice a year.

How To Do It:

Whether you choose to revisit your 401(k) yearly or every six months, it's basically a chance to examine your investments and readjust them to maximize your return. When you're choosing how to allocate your money, the best thing to do is to consult the advice of a financial professional.

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Life insurance offered through Allstate Life Ins. Co. & Allstate Assurance Co., 3075 Sanders Rd, Northbrook IL 60062; Lincoln Benefit Life Co., 1221 N St. Ste 200, Lincoln NE 68508; American Heritage Life Ins. Co., 1776 American Heritage Life Dr., Jacksonville FL 32224. In New York, life insurance offered through Allstate Life Insurance Company of New York, Hauppauge NY.

Please note that the offering insurance company or its agents and representatives cannot give legal or tax advice. The brief discussion of taxes on this page may not be complete or current. The laws and regulations are complex and subject to change. For complete details consult your attorney or tax advisor.

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