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Are People too Lax in Managing Their Retirement Account?

Managing your retirement account

You may already be saving for your retirement by putting money into a 401(k), IRA, SEP IRA, 403(b), or 457 retirement plan. That’s an excellent, long-term strategy. But you may need to go a step further. When I talk with people about their existing retirement plan accounts, they generally can tell me two important items: (1) approximately how much money the plan currently holds and/or (2) how much money they set aside each week or month for the retirement account.

What they can’t tell me is how the money is invested. They just don’t know for sure.

This is not an uncommon situation. People setting up their retirement account through an employer usually choose from a set of prespecified options, and these may include a broad range of mutual funds that invest in a huge array of equities and bonds. If you don’t closely read the plan’s paperwork, funds’ prospectus, and performance charts, you can lose track of where the contributions to your retirement account actually go. And if you do read all the paperwork and documentation provided, it’s easy to get lost in the details.

As a financial advisor, as important as the contribution amount and total value is, I’m interested in the mix of investments and how they are allocated. Does the investment mix meet your expectations for financial growth? Do your investment allocations align with your personal preferences and interests? For example, you might prefer to avoid certain industry sectors, like weapons manufacture or fossil fuels. With large mutual funds, it may be difficult to understand how they invest your money.

This doesn’t mean you should be very aggressive in managing your retirement plan investments. On the other hand, you shouldn’t be lax either! The first step is to compare the growth of your account with the current market return (generally the NASDAQ or S&P 500). Hopefully, you won’t be unpleasantly surprised.

Next, investigate in more detail how your investments are allocated (e.g., stocks vs. bonds; mutual funds and their types). It doesn’t matter if the retirement account is a conventional, Roth, or SEP IRA; 401(k); 403(b); or 457 plan. The questions are the same.

If you don’t know or cannot find out more information, contact me at Isakov Planning Group. I can help clarify how your money is invested and how it is performing. I can also help you get a handle on the types of investments you want to make versus what is already in your account. Make an appointment with Isakov Planning Group to begin the discussion.

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Southampton, PA 18966

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North Brunswick, NJ 08901

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New York, NY 10018

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