The start of a New Year is a natural time to reflect on the year past and prepare for the future. Whether you’re close to retirement or still have many working years ahead of you, it’s important to check in on your progress toward retirement readiness every year. Follow our retirement planning checklist to stay on track.
Determine how much of a nest egg you will need
Your nest egg requirements depend on your current and future expenses. If you have not built a budget and begun planning for retirement, start the process now. Search online for retirement calculators to get a range of estimates for your nest egg needs, and to see what annual saving rate will get you there.
Assess your investment performance
It’s important to take stock of your investments periodically. Take a look at how your investments are doing relative to their appropriate benchmarks, and consider whether any of your current choices warrant reconsideration for performance reasons.
Rebalance your mix of stocks, bonds and other investments
When stocks have a strong year, as they did in 2017, they end up being a larger slice of the overall portfolio by default. Take the time to see if your asset allocation needs rebalancing, which in a year like this usually entails trimming stocks and reinvesting the proceeds in bonds. Your asset allocation is your best tool to align your risk tolerance, needs, goals and objectives.
Maximize annual contributions
Employee 401(k) contributions for 2018 have increased slightly to $18,500 with an additional $6,000 catch-up contribution allowed for those 50 and older. For both traditional and Roth IRAs, the maximum contribution for 2018 is $5,500 with a catch-up contribution of $1,000. Self-employed individuals have several options for retirement saving. Be sure to review them with a tax professional to ensure that you are maximizing annual contributions.