Looking out the kitchen window recently, I saw a handful of blooming amaryllis plants. The big fluttery pink and red blossoms look great in an otherwise dreary part of our yard. They all started as bulbs purchased from big box stores around Thanksgiving designed to bloom indoors by Christmas. Charleston is tropical enough we can plant them outside with fantastic results—or so I had been told.
The first bulbs were planted in the corner of our yard eight years ago. Having a very pale green thumb, I was skeptical I could coax the bulbs to flower again. Nothing happened for the first few years because my husband kept mowing down the green stalks thinking they were stubborn recurring weeds. The bulbs have since been relocated out of reach of the lawn mower’s blades and I’ve learned when to weed, feed, and prune them. Our research and efforts yield beautiful blooming flowers each spring.
Retirement planning can also have a haphazard start. Most of us start to put some money in a retirement plan like an IRA or 401(k), not paying too much attention to the plan details, how much we are adding, or the allocation. We may even hack away at the plan by taking an early distribution. We change jobs and start new plans, leaving the old ones behind with outdated addresses and beneficiaries.
However, with a bit of care, your 401(k) can turn into the dazzling centerpiece of your retirement nestegg. Follow these steps annually:
- Review how much you are contributing to the plan and how much your company is matching.
- Can you increase the contribution? If you aren’t adding the maximum amount ($18,000 or $24,000 if over age 50 for 2017), are you adding at least 10% of your income? You will be thankful for every dollar you added once retired.
- Is the mix of stocks and bonds still appropriate? Have you looked at how much risk you are taking? Has one of the funds grown substantially more than another one? Your risk level at age 25 should be much more aggressive than at 55—adjust the investments accordingly.
- Do you have old retirement accounts you don’t monitor? Consider consolidating them into one IRA or your current 401(k) to make reviewing the allocation and beneficiaries easier.
Our planting experiment is now a fantastic splash of color in our yard every spring. Your 401(k) can be a large pot of savings, make sure to give it some tender loving care each year.
Opinions expressed are that of the author and are not endorsed by the named broker dealer or its affiliates. All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor.