When handed 401(k) information from an employer, many participants are overwhelmed with the information they are provided. Ideally, each participant would allocate across a diversified portfolio that best represents their risk tolerance and timeframe until retirement. Unfortunately, the information provided is often too complicated to make easy decisions.
This is where a Certified Financial Planner ® can add value. Trained in retirement planning (and other areas of financial planning), investments, risk management, estate planning and taxes, CFP® practitioners are best qualified to review your overall situation.
Your investment goals for your 401k should be coordinated with any other investments you may hold outside of your 401(k). If your employer offers matching dollars in your 401(k), you should strive to ensure that you can maximize this benefit. After all, this is free money and immediately adds to your investment performance before even entering into your investments.
Personal finance is just that – personal. Your specific set of facts will often be unique to you. You may be saving for a home, providing funds for children’s education, reviewing debt consolidation, have unusual medical expenses or any other set of unique circumstances.
What Should You Be Considering?
What are your long-term goals?
Do you have shorter term goals that need to be coordinated with long term goals?
Have you reviewed your 401(k) plans’ “Summary Plan Document” to make sure you are maximizing your benefit?
Do you understand your risk tolerance and if you are married, does your spouse have a similar or different risk tolerance?
Do you understand the investments in your retirement account?
Is someone offering to review these investments with you at least annually?
Too often, retirement plan education is full of industry jargon and difficult to understand. If you have a great understanding of the above questions, you are ahead of the game and probably have a good start to head in the right direction for your retirement planning. If not, consider consulting a Certified Financial Planner ® who can best provide you with important information to steer you in the right direction.
Remember, it’s your future!