It’s always a smart idea to check-up on your retirement plan, at least, annually. In this post, we are going to keep the annual check-up simple, i.e., keep it to four (4) main ideas. Although these four (4) main ideas are not the only factors to keep track of when monitoring your retirement plan, they are a good start that will heed you well if done.

Check-up #1) Is my portfolio on target? If you are in the accumulation phase, are you contributing 15% or more of your annual gross income? This rough metric is a good place to start. Notably, if you are a high-earner, you need to be contributing 20% or more of your annual income as Social Security will replace a smaller portion of your retirement “paycheck.” If you are already retired, is your total amount withdrawn from all retirement accounts in line with the often cited 4% withdrawal rule (adjusted for inflation annually thereafter)? If not, you may need to actively adjust your withdrawal rate to better match the IRS suggested withdrawal rates.

Check-up #2) Is my asset allocation OK? With this 10 year bull market, many portfolios are off-kilter. The 10 year run of the stock market has left many portfolios stock heavy. If you are a twenty-something than this high equity/stock exposure is probably OK. However, if you are nearing retirement or in retirement, you need to make sure your stock/bond/cash allocation is appropriate, not only for your age but your risk tolerance, as well. If you are not sure of an appropriate stock/bond/cash allocation for your age, you can just mirror the asset allocation of a life-cycle or target date fund by Vanguard. A good place to start is the old saw of subtract your age from 110 and that is how much you should have in stock. For example, a sixty (60) year old may have 50% of their portfolio in stock (110 minus 60). The remaining 50% of their portfolio would be divided among bonds and cash.

Check-up #3) Do I have enough cash? If you are still working, six (6) months to fifteen (15) months of cash should be enough to weather you through any layoffs or emergency fund needs. The higher your income, the closer you should be to fifteen (15) months of cash on hand. If you are retired, I recommend two (2) to three (3) years worth of living expenses in cash, so you minimize your chances of having to sell stock in a down market.

Check-up #4) There are only two certain things in life: death and taxes. If you are still working, make sure you max out your retirement contributions to your tax-sheltered accounts. 2019 contributions have increased to $19,000 for your 401k ($25,000 if you are 50 or older) and to $6,000 for your IRA ($7,000 of you are 50 or older). Contributions to these accounts reduce your taxable income. If you are retired, make sure you take your required minimum distributions from your retirement accounts (don’t get caught by the 50% penalty) and possibly use strategic withdrawals to maintain your appropriate asset allocation.

As mentioned above, these are not the only factors to check on when reviewing your portfolio. However, these provide a pretty good starting point. If you should have any questions about your portfolio, feel free to contact Intelligent Investing at www.mynmfp.com/new-clients for a no-obligation consultation.

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