For Mark Roberts’ Use: Employer-sponsored retirement plans are a valuable tool in securing your financial future. But like most tools, they must be used correctly in order to achieve the best results. Managing the assets within your retirement plan can be confusing. While it’s important to keep in mind that there is no single plan of action that will always work for everyone, ask yourself these questions before you begin to navigate unfamiliar waters.
How many years until I retire? If you have many years left before retirement, now is the time to build capital. It’s important not to take too much risk with your money, but if you’re many years from retirement you may be more comfortable with some risk. If you’re nearing retirement, it’s usually smart to move your assets to more stable, low-risk investment vehicles.
Have I diversified my retirement plan? No matter how comfortable or averse to risk you may be, it’s always a good idea to diversify your investments. Spreading your assets across several different holdings will help protect you from major losses. Keep in mind that this won’t guarantee against losses; it simply is a better way to manage the risk.
Do I have a guaranteed interest contract? A guaranteed interest contract is backed by an insurance company, and offers a definite rate of return for a specific length of time. This may be an option to consider if you want a little more safety in your portfolio. Since these contracts do vary, be sure to check the backing insurance company’s ratings from agencies like Standard & Poor,’s Moody’s, A.M. Best, and Fitch.
Once you get the hang of managing your retirement plan, you need to review it periodically and make adjustments based on your priorities, changes in the market, and your own financial situation. Communicate with your financial advisor on a regular basis, so that together you can continue to adapt your financial plan for the future.