Are You Watching Your 401(k) Enough?

When it comes to retirement planning, managing your 401(k) can feel like an overwhelming task. But fear not, today we bring our wealth of knowledge to the table, specifically for Telecom employees.? From unraveling the complexity of fund choices to the profound impact of asset allocation, we're here to guide you through making informed decisions for a prosperous retirement.

1. So Many Investment Choices!

Many of us tend to overlook our 401(k) plans even though we intend to keep an eye on them. With an extensive range of investment options available, increasing from just three in the early '90s to as many as 40 today, it's not surprising that we choose to "set and forget" our retirement contributions.

1. Why Target Retirement Funds Might Not Be Your Friend.

Target Retirement funds are a popular choice for many investors, but personally, I have some reservations about them. While they offer convenience and simplicity, I find that they lack the necessary level of detail and transparency. One of the key concerns I have is the lack of communication regarding any changes in the fund's investment strategy. It's essential for investors to have confidence that their retirement funds are being managed with their individual needs in mind, rather than being subject to a one-size-fits-all approach.

1. Crafting Your Customized 401(k) Strategy.

We believe in taking an active approach to managing your 401(k). We recommend diversifying your investments across various fund categories to achieve a well-rounded portfolio. Above all, we stress the importance of regularly reviewing your 401(k) to ensure it aligns with your financial goals and adapts to the ever-changing market conditions.

1. The Power of Asset Allocation.

It is crucial to have a good understanding of asset allocation. We recommend a novel formula that you can consider while determining your stock investments, which is "120 minus your age". This strategy offers a modern twist to the old adage of “100 minus your age” and probably is more aligned with today’s longer lifespans.? Historically, stocks are the best way to overcome inflation, and maintaining an adequate percentage of them in your portfolio can help ensure a more successful retirement.

From there, you need to allocate a certain percentage in the stock market and the remainder in short-term investments and bonds.? Experts recommend spreading out the risk across different funds with differing goals, such as Large US Companies or International Companies or Small US Companies.? Calculate a percentage and allocate both your existing balances and future contributions into this mix.

1. ?Ongoing Maintenance.

Here is where most investors fall down - monitoring your investments.? It shouldn’t take you more than an hour per year.? Per year!??

When you are notified that your 401(k) quarterly statement is ready - usually via an email from Fidelity - you can quickly log in and ensure that your current balances match your future contributions mix.? If there is a discrepancy - say one investment is doing much better than the others, you can reallocate that money from the over-performing investment into one of the under-performing ones.? (Note:? It is likely that, over time, you will be moving money from stocks into bonds due to the historical disparity of the returns.)

Conclusion:

Having a strategy and actively managing your 401(k) can make a world of difference in your retirement readiness. The key takeaway? Moving beyond the simplicity of target retirement funds and engaging with your 401(k) through educated, strategic choices can lead to a more secure financial future. Ready to take control of your retirement destiny? It might be time to give your 401(k) the attention it deserves. And remember, help from seasoned professionals is just a consultation away.

Whether you're a telecom professional nearing retirement or just starting to ponder over your 401(k), we encourage you to delve deeper into your retirement planning strategy. Follow us for more insights, and don't hesitate to reach out for personalized advice tailored to your unique circumstances.

To learn more about your 401(k), listen our latest podcast on your favorite podcast platform at https://bit.ly/YTRep96 ?