Time for a retirement checkup

As you invest for a long-term goal like retirement, a variety of things can impact your 401(k) portfolio — from market fluctuations to major life events like switching jobs or getting married. That’s why it’s important to keep an eye on your 401(k) over time. By reviewing your account at least once a year, you can check your progress toward your savings goal and make changes if needed. Try this 3-step checkup to make sure you’re on track for a secure retirement.

  1. Check your contribution rate. Try to contribute enough to your 401(k) to receive your employer’s full matching contribution, if offered. If you can’t contribute enough to get the full match right now, aim to slowly increase your contribution rate over time – even a 1% bump each year can make a big difference by the time you retire. To make it easier, many plans have an auto-increase option that will do this for you.

    If you’re in a place financially to contribute more, the 401(k) contribution limit in 2021 is $19,500, or $26,000 if you’re age 50 or older. Even if your company doesn’t offer a match, your plan’s tax advantages still make it a valuable savings tool. The more you contribute, the more you can lower your taxable income and benefit from tax-deferred growth.

  2. Review your investment choices. Are they still right for your goals and investment timeframe?
    • If you’ve chosen your own combination of investments: Make sure your portfolio includes a variety of investment types, since a diversified portfolio is better equipped to handle market fluctuations* — then see how those investments have been performing lately. For example, if your stock funds have performed better than your bond funds, your portfolio may be more heavily weighted in stocks — and riskier — than you had intended. You can rebalance your portfolio by selling some of the better-performing funds and buying more of the lesser-performing funds. Your plan might offer an auto-rebalancing feature to do this for you.
    • If you’ve chosen a single “ready-mixed” fund: By choosing one of these pre-diversified funds based on your expected retirement year or risk tolerance, you can achieve a professionally balanced portfolio in a single step. Just confirm that your selected ready-mixed fund is still right for your needs. Keep in mind that an age-based ready-mixed fund will be automatically rebalanced and reallocated for you over time, generally becoming more conservative as you approach retirement.
  3. Tie up any loose ends. Now might be a good time to:
    • Consolidate accounts. In most cases, if you have old 401(k) accounts from former employers, you can roll them into your current employer’s 401(k). By doing so, your savings will maintain its tax-deferred status and you’ll probably find it easier to have fewer accounts to manage.
    • Keep an eye on loans. If you have an outstanding 401(k) plan loan, review your balance and remaining payments. Most 401(k) plans allow you to you repay the loan faster with no prepayment penalty. If you don’t repay it in a timely manner, you may face taxes and penalties. Perhaps the biggest risk is leaving your job with an outstanding loan balance. If that happens, you’ll probably need to repay the entire balance within 90 days of your departure. If you don’t repay, you’ll be in default and the remaining loan balance will be considered a withdrawal. You will owe income tax on the full amount, and if you’re younger than age 59½, you may also owe a 10% early withdrawal penalty. In other words, you could find your retirement savings substantially drained.
    • Review your beneficiaries. Did you know that 401(k) beneficiary designations override the contents of a will? It’s important that your selected 401(k) plan beneficiaries stay up to date with your current wishes. You should name both a primary beneficiary and at least one contingent beneficiary, who would receive your assets if your primary beneficiary has died. If you recently got married or divorced, or had a birth or death in the family, you might need to revisit your choices. Log in to your plan’s website or contact your plan administrator to make changes.

*Diversification does not ensure a profit or guarantee against a loss.

Small changes can add up

Looking for simple ways to stretch your paycheck so you can invest more money in your 401(k)? Try this interactive tool to see how you might be able to turn today’s small spending changes into big savings for the future!


“8 Steps for Your Annual 401(k) Checkup,” Kiplinger (kiplinger.com)
“Retirement Topics – Plan Loans,” Internal Revenue Service (irs.gov)
“401(k) Loans, Hardship Withdrawals and Other Important Considerations,” FINRA (finra.org)
“7 To-Do Items for Your Fall 401(k) Checkup,” myFICO (myfico.com)
“Be Smart in Naming Beneficiaries of Your 401(k),” Investopedia (investopedia.com)