Revisiting your retirement plans

Finances

You've been doing all the right things to get ready for retirement: building up your nest egg, contributing to your 401(k) and sticking to a plan that you or your financial professional set up years ago. And you assume your money's been growing according to plan. But does that plan still work for you and the lifestyle that will stir your soul in the next chapter?

"There is an important balance in managing your investable elements," says Chris White, CFA, co-author of Working With the Emotional Investor: Financial Psychology for Wealth Managers (Praeger), in an interview conducted by Athene. He likens your retirement plan to a garden. You can over weed it if you pay too much attention, but if you ignore it for too long, the plants won't grow well.

Here are five reasons you may want to check to see how your retirement portfolio is growing — and consider revising it.

  1. You set your plan assuming a 7 percent return.
    While that 7 percent number has been a rule of thumb for years, White says you may want to ratchet it down to 6 percent to be safe — especially as past performance of assets may have been under 7 percent.
  2. You haven't adequately accounted for rising health care costs.
    "Health care may be your biggest expense, and you want to be sure that you can stay even with costs as they rise," says White. Check to see if what you calculated for health care costs when you first created your plan matches the current projections for health care and medical costs.
  3. Your asset allocation hasn't changed as you approach retirement age.
    Many financial professionals may say that your assets should become less risky as you get closer to needing income in retirement. But your savings may need to continue growing even in retirement. If it doesn’t, you may risk outliving your money, known as longevity risk. Keeping a healthy allocation to stocks in your retirement portfolio can help you stay ahead of inflation, especially health care inflation.
  4. You haven't checked it in years. 
    Don't let your retirement portfolio go for five or 10 years without reviewing the asset allocation. An annual check-up is wise. If you revisit your plan annually and find that your original calculations are falling short, White says that you may still have time to put money away and get back on track. He suggests reviewing your current spending needs and trying to put away more money than you currently are. He also suggests making sure that you put that money in the right place, like maxing out on your 401(k) contributions, especially if your company offers a match.
  5. Your vision of retirement has changed.
    When you first created your retirement plan, were you focused on travel? But now that you have grandkids, maybe you are focused on spending time with family? Time and life experiences can change perspective — and that’s only normal. Get in tune with your future self by thinking about what you want to do in the short- and long-term years of retirement. Take this quiz to discover the lifestyle you aspire to, and then create your plan for happiness.

Life changes for everyone, and that means your retirement strategy may need updates along the way to keep up. Experts recommend talking with your financial professional every year to make sure you’re on track. Share your goals and major turns life may have taken, then update your retirement strategy when and how it makes sense. While daily checks on your retirement savings can cause undue stress, ignoring its progress over time may result in some surprises you don’t want later on.

This information is brought to you by Athene — where unconventional thinking brings innovative annuity solutions that can help make your retirement dreams a reality.

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