Managing Money God’s Way

Time for your Retirement Account annual checkup

Your doctor wants to see you at least once a year just to make sure everything is in order and nothing has gotten out of balance. He (or she) will want to run some tests, analyze the results and then determine if there are any changes you need to make to your routine. If everything looks good, you will schedule another appointment, and unless something major happens, you should be good for another year.

You should apply the same “annual checkup” to your 401(k) and IRA. This has never been more true than this year. I think we can all agree that 2008 could be considered something major. If you ignore your retirement accounts at this time, and something needs to be changed, a bad situation will only be made worse. So sit down, get comfortable and review the damage that 2008 has caused.

How to evaluate the situation

Dave Kansas at WallStreeJournal.com offers 4 suggestions that will help you perform your retirement fund checkup.

1. Stay diversified – if you were heavy in stocks before 2008, you understand how a lack of diversification can hurt you. While the stock market was losing over 30% last year, most bonds actually returned a gain for the year. A good mix would have help lessen your losses.
2. Don’t double down – if you are getting matching money from your company, make sure your match isn’t in company stock. If your company goes under (think Enron) not only do you lose your paycheck, but you also lose a large percentage of your retirement account.
3. Avoid inertia – with things going south, you don’t want to let things keep going. Revisit your investment strategy and make sure your account is structure to meet your objectives. With huge losses in the stock market, you may want to restructure your balances to get things back inline with your strategy.
4. Watch your costs – When the market gives way to the Bear, every penny sucked up by fees, makes your return look even worse. Make sure you are working with your broker to minimize fees in your IRA.

Set your appointment today!

The longer you put off your annual checkup the more likely you are to find things that need immediate attention. Agree now to set aside some time this weekend, with a cup of coffee and a quite room and evaluate where you are, and where you want to be. You very likely will need to make some changes here and there, but like your doctor will tell you, you health is one of the most important things you have. Take care of it.

Related Websites

• Your calling doesn't necessarily fund your retirement by itself
• Year End Tax Planning Strategies
• 401(k) vs IRA Deathmatch
• Is it Safe to Borrow from a 401(k)?
• 2010 Roth IRA Conversion Rules

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