- Written by Terry Turner
Senior Financial Writer and Financial Wellness Facilitator
Terry Turner has more than 35 years of journalism experience, including covering benefits, spending and congressional action on federal programs such as Social Security and Medicare. He is a Certified Financial Wellness Facilitator through the National Wellness Institute and the Foundation for Financial Wellness and a member of the Association for Financial Counseling & Planning Education (AFCPE®).Read More
- Edited ByLamia Chowdhury
Lamia Chowdhury is a financial content editor for RetireGuide and has over three years of marketing experience in the finance industry. She has written copy for both digital and print pieces ranging from blogs, radio scripts and search ads to billboards, brochures, mailers and more.Read More
- Financially Reviewed ByMarguerita M. Cheng, CFP®, CRPC®, CSRIC®, RICP®
Marguerita M. Cheng, CFP®, CRPC®, CSRIC®, RICP®
Marguerita M. Cheng, CFP®, CRPC®, CSRIC®, RICP®, is the founder and chief executive officer at Blue Ocean Global Wealth. She is a past spokesperson for the AARP Financial Freedom campaign and has extensive expertise in the fields of financial planning, personal finance, retirement and investing.Read More
- Published: November 21, 2022
- Updated: October 10, 2023
- 17 min read time
- This page features 8 Cited Research ArticlesKey Takeaways
- You should review your retirement plan at least once a year — and after every major life event — to make sure it is still on track.
- Use your routine reviews to rebalance your retirement accounts allocations to keep their earning potential on track.
- Periodic reviews of your retirement plan can help you determine if you are still on track for your planned retirement age and make corrections if you aren’t.
- Retirement planning has a lot of moving parts. A checklist can help make sure you cover all aspects of your retirement plan each time you review it.
When To Evaluate Your Retirement Plan
Financial professionals vary on how often you should review your retirement plan — anywhere from once every six months to every five years. But they tend to agree that you should not “set it and forget it” once you create a retirement plan.
“All in all, my biggest piece of advice is to plan early and often, ensuring you stay on course along the way,” Jared Weitz, CEO of United Capital Source Inc., told RetireGuide.
The most common advice tends to be that you should review your plan every year. But you should also review them after every major life change.
“Whether it’s a new job, having a child or any other occurrence that could majorly shift your finances, I recommend taking another look at your retirement plan to make sure you’re still on track,” Weitz said.
Several of the financial professionals we heard from recommend reviewing your retirement plan with the help of a financial advisor.
“Retirement plans can seem daunting, overwhelming and stressful, but scheduling a yearly review will help you to feel calm, confident and in control of your plan,” Henry Abenaim, CEO of Fundingo, a loan management software company, told RetireGuide.
Abenaim has more than 25 years of experience in the financial services industry. He also pointed out that routine reviews can alert you to nasty surprises.
“Another key reason for an annual review is that this will help you maintain account security — you can be alert for any fraudulent activity, as well as updating passwords to minimize this risk,” Abenaim said.
Once you retire, you may need to keep an even closer eye on your plans.
“If you’re in retirement, it’s a good idea to review your retirement plan every six months so that you can make sure your spending needs are supported by your plan,” David Edmisten, Founder and Lead Advisor at Next Phase Financial Planning, told RetireGuide.
Starting your retirement planning early in life gives you a long time — 20 to 30 years — to build up savings and ride out market fluctuations. But routinely reviewing that plan can be essential to making your retirement a reality.
How To Evaluate Your Current Retirement Plan
In short, you want to make sure your retirement plan is giving you the best bang for your buck. That means, you’re getting the best return on your retirement investment, maximizing your tax breaks on retirement savings and generally reaching your retirement goals as quickly as possible.
Keep Your Investments on Track
Markets fluctuate constantly. Bull markets may bring a windfall while recessions may wipe out gains. Inflation may mean you have less buying power with the retirement income you were expecting.
Building a diversified portfolio with a mix of assets that historically don’t fluctuate in the same directions may help your retirement plan ride out market swings.
Your review should consider whether your investments are still appropriate for your unique personal and financial circumstances. This may be based on their continued performance and your changing level of risk.
Analyzing your plan with a financial professional can help you keep your investments on track. And can help you decide if you need to invest more or work longer before you retire.
Protect Your Income Now and in Retirement
Consider life insurance to guarantee your income will be replaced if something happens to you. This can help keep your retirement plans on track for your spouse and children. It may also mean that you can gradually reduce your life insurance needs as you get closer to retirement.
If you have life insurance, periodic reviews will allow you to make changes more efficiently and maximize both your coverage and savings on premiums.
You should also keep up with retirement records from your employer to make sure you receive the correct amount of retirement benefits, according to John J. Conway, an Employee Retirement Income Security Act (ERISA) attorney.
“Retirement benefits are determined by a complex formula of labor, financial contributions and length of service to an employer — and employer-based retirement assets grow as a result of hours or years spent working, payroll contributions and seniority,” Conway said in a statement.
That’s a lot of moving parts — and a lot of opportunities for something to get caught up in the gears.Conway recommends a four-step process to safeguard the benefits you’re entitled to:
- Make sure your retirement benefits are accurate while you are still employed.
- Request printouts of estimated benefits from your employer’s HR department or plan administrator’s office and correct any errors before you leave the job.
- Save copies of the last pay stub from every working year because it will be a record of contributions and deductions for the whole year.
- Get a final retirement estimate before you retire and do not submit your retirement paperwork until the benefits are calculated accurately.
He says inaccuracies are more common than expected. You can save time and money by keeping track of your benefits before you retire.
In addition, monitor the estimated amount of Social Security benefits you might receive. The Social Security Administration has an online calculator that shows you an estimate of what you might receive if you retire at different ages after age 62.
Tax efficiency means paying the least amount of tax you must pay.
Some retirement plans such as 401(k) plans and traditional IRAs defer income taxes on your contributions until you withdraw money from your account. Others – such as Roth IRAs – tax your contributions as income, but you don’t have to pay income tax on your withdrawals.
Putting taxable investments such as REITs and taxable bonds into a tax-deferred account can increase your tax efficiency. As can putting tax-deferred investments into non-deferred accounts.
Again, working with a financial advisor or other professional can help you sort your investments into the most tax efficient plan.
Consider Your Family’s Needs
Your annual retirement plan review lets you adjust your plan to changes in your family’s needs, especially after major life changes. It’s a chance to adjust your strategy to consider new children, college savings, health care decisions and estate planning.
Reasons for Revising Your Retirement Plan
In addition to routine annual or semi-annual reviews of your retirement plan, there are other instances you should consider revising your plan.
These can include any event that dramatically changes your financial situation or retirement goals, including major life changes, new lifestyle choices, fluctuations in the economy and your own end-of-life considerations.
John Lennon once wrote, “life is what happens while you are busy making other plans.” And life can make your retirement plan obsolete.
When you originally create a retirement plan, you base it on your financial situation at the time. Anything that affects that timely situation also affects your plan. This may include new additions to your family, a change in your career or a divorce.Examples of Life Events Affecting Retirement Plans
- New child
- Divorce or death
- Illness or disability
- Changing jobs
- Selling or buying a business
- Getting a raise
- Providing or needing a caregiver
These and other life events can cause major changes that create a ripple effect into your retirement. They may provide more costs that limit how much you can save toward retirement or allow you to increase contributions toward it.
They may also create situations where you can retire earlier than planned or require you to work longer before you can retire.
Consider reviewing and calculating the cost or benefit of major life events when they happen. This allows you to respond quickly to potential changes you need to make.
Lifestyle Choices and Needs
A move to another state with a higher cost of living or an unexpected medical condition can throw a wrench into well-crafted retirement plans.
“You really don’t know what health care will cost you in retirement, but you can use averages, as well as family and personal medical history to have an idea of whether you’ll spend less or more than the average person,” Jake Sensiba, an investment advisor at CRG Financial Services told RetireGuide.Examples of Lifestyle Changes Affecting Retirement Plans
- Changes to your health
- Moving to a new location
- Pursuing new interests or hobbies
- Housing costs
If you find your cost-of-living changed when you changed your lifestyle, it’s typically a good time to review your retirement plan.
Market Fluctuations and an Unpredictable Economy
Retirement savings are frequently at the mercy of an unpredictable economy.
“A well thought out retirement plan should have already considered that there will always be changes in the economy, stock markets and inflation,” Edmisten said.Examples of Market & Economic Factors Affecting Retirement Plans
- Rising or falling interest rates
- Future of Medicare and Social Security
- Family financial emergencies
Financial experts often recommend putting at least six months of living expenses into an emergency fund before you start investing in anything else. If you lose your job or are unable to work, emergency funds can keep you afloat without running up debt.
“This will help them avoid making rash decisions during times of economic uncertainty or recession when they may feel pressured into making investments that aren’t necessarily good for their long-term goals,” Jones said.
Diversifying investments, including diversifying within asset classes that you invest in, may minimize your financial hit during market turbulence. Reviewing your plan with a financial professional may help you with a strategy that protects your investments.
End-of-life considerations spell out how you want your retirement plan to play out. These actions determine how you will dispose of any assets you leave behind, which affects your beneficiaries. These decisions may change over time, so you should consider reviewing them as part of your retirement plan reassessments.
You should consider how you want to divide up assets amongst your heirs, what you want to go to charity and how you’ll pay for burial and other end-of-life costs such as medical or long-term care.End-of-Life Considerations To Review in Your Retirement Plan
- Estate planning
- Living will and testament
- Family trust
- Home or property assets
- Life insurance
- Burial or final expense insurance
- Reassessing beneficiaries to your life insurance
“A good retirement checklist includes estate planning, no matter what your net worth,” Renee Fry, CEO of online estate planning firm Gentreo told RetireGuide. “From a health care proxy to a will or trust, these are living documents that state your choices that need to be completed and updated regularly.”
Availability of Liquid Assets
Don’t underestimate the value for having liquid assets that can quickly be converted into cash or including a sizable cash element as part of your retirement plan.
“Holding proper levels of cash reserves is an area that is often missed in a retirement plan review,” Edmisten said. “I suggest retirees and those approaching retirement always have a minimum of 12 months’ worth of expenses held in cash.”
This lets you have cash handy for regular spending, as well as for emergencies. Having that buffer means you won’t have to sell an asset that’s lost value, effectively taking a loss if the market is down at the same time, according to Edmisten.
Updating Your Investment Strategy
Your retirement investment strategy reflects your goals. As your goals change, you may need to adjust your investment strategy to keep on track.
Financial professionals typically recommend reassessing your investment strategy once or twice a year. That’s in line with what many recommend for reviewing your overall retirement plan.
You may need to “rebalance” your 401(k) or other retirement account. Rebalancing means buying and selling the different types of investments in your retirement portfolio to line up with the percentages for your asset allocation.
Let’s say you originally wanted 50% of your retirement portfolio dedicated to U.S. aggressive growth funds and the other 50% in value funds. The aggressive growth fund suffered losses and now makes up only 45% of your assets. The value fund is 55%. You may want to rebalance your portfolio so that they are again 50/50.
Financial professionals frequently warn against making quick changes when the markets suddenly and sharply change directions.
“The true power of investing comes from leaving your money invested for the long term,” Elle Kaplan, CEO and CIO of LexION Capital told RetireGuide. “If you take money out early, you will not only pay for doing so but also interrupt the potential of your money to keep growing.”
In the end, any adjustment to your investment strategy should reflect your current financial situation and your goals for retirement.
Evaluating Your Retirement Age Goal
Changes in income or your retirement account balance may allow you to retire earlier than you planned or cause you to work longer than you expected. Reviewing your retirement plan can help you decide if you need to change your retirement age plans.
“Choosing when to retire isn’t a one-size-fits-all decision, so if you’d like to retire at a different age than you originally planned for, then I’d also recommend taking a second look at your retirement plan,” Weitz said.
Life events may also alter your schedule.
“It is a good idea to reevaluate your retirement age when facing big monetary fluctuations, such as when you become a parent, find a new job, start a new career or move to another place,” Kaplan said.
Ultimately, your retirement age hinges on your overall retirement plan. Reviewing your plan periodically can help you get a realistic picture of how much you need to retire at a certain age.
“Your ability to save and your expenses are the two biggest factors,” Sensiba said. “If you are savings less right now than you ought to, you might have to delay retiring. If you are saving more than you initially planned, you might be able to move it up.
Your Retirement Plan Checklist
Reviewing your retirement plan can be stressful and complicated. But breaking it down in stages makes it more manageable.
“It’s a great idea for retirees and those approaching retirement to create a checklist for evaluating and updating their retirement plan,” Edmisten said.
RetireGuide has prepared this downloadable retirement review checklist to ease some of the stress and complexity of that chore.
Retirement Planning Review FAQsWhat can be reviewed at home and what should be discussed with a financial advisor?
Today, most elements of your retirement planning can be reviewed online at home. But there are some parts that may be best reviewed with the help of a financial advisor or other financial professional. Their experience and expertise can be particularly helpful with items such as dealing with major changes due to life events, reviewing your beneficiaries, issues dealing with your savings and life expectancy, your income needs in retirement and the performance of your retirement account or other savings and investments.How can I discuss my desire to change retirement plans with a spouse and/or family?
Talking about changes in retirement plans with your family can be a challenge. Especially if it deals with long-term care, end of life planning or life expectancy. As difficult as it may be, it is important that your family knows how you want to deal with issues concerning your health, your choice of living arrangements and future and final care wishes.
You can spread these discussions out, but don’t wait for the “perfect time,” otherwise, it won’t get done. Choose a time and place to have a discussion with family members and be honest with them. Make your desires clear.
And don’t be afraid to get help to carry out these discussions. A third party — your doctor, clergy, elder law attorney or financial professional, depending on the nature of the discussion — can offer guidance to you and your family to clearly define and understand your wishes.When will I know I’m ready for retirement?
There are both emotional and financial reasons for wanting to retire.
From an emotional standpoint, it can be when you can’t wait to leave your job for retirement, or you simply no longer enjoy your work. You may feel work is “in the way” of enjoying life. It may also be a joint decision between you and your partner — that it’s time to move on to the next phase of your life.
From a financial perspective, you may know you’re ready for retirement when you’re financially prepared to meet your retirement goals. That means having paid off debt, built an emergency fund and established a retirement income source that will cover your planned retirement lifestyle’s expenses.
Last Modified: October 10, 2023
David Edmisten, CFPⓇFounder & Lead Advisor
Next Phase Financial Planning
David Edmisten is a Certified Financial Planner™ professional with 16 years of experience helping clients to retire and enjoy the next phase of their life confidently. He founded Next Phase Financial Planning in Prescott, Arizona, which provides virtual meetings with clients. His career includes experience at Charles Schwab, Bank of America/Merrill Lynch, ETrade and Wells Fargo Advisors.
Jacob SensibaInvestment Advisor
CRG Financial Services
Jacob G. Sensiba is a third-generation Registered Representative/Investment Advisor Representative at CRG Financial Services, Inc., in Brookfield, Wisconsin. The company provides retirement and financial planning, along with asset management, life insurance and other retirement savings services. Sensiba is a licensed Registered Representative for the states of Wisconsin, Nebraska, Arizona and Virginia. He is a licensed Investment Advisor Representative for Wisconsin.
Elle KaplanCEO and CIO
Elle Kaplan is the CEO and Founder of LexION Capital and the CIO of Elle Capital. LexION Capital specializes in managing money for individuals, families and institutions including retirement planning and investment management. Kaplan holds a bachelor’s degree from the University of Michigan and an executive MBA in finance from Columbia University.
Renee FryCEO & Founder
Renee Fry is the CEO and founder of Gentreo, an online estate planning firm based in the Boston area. It specializes in wills, powers of attorney, healthcare proxies, pet powers of attorney and provides a digital family vault for clients. Fry has an MBA from Harvard Business School and is an entrepreneur with IPO, start-up, strategy, partnership experience.
Jared WeitzCEO & Founder
United Capital Source Inc.
Jared Weitz has been in the financial services industry for over 15 years. He founded and is CEO of United Capital Source, a company that specializes in helping businesses fund their growth. Jared is a member of the Forbes Finance Council, Young Entrepreneur Council, NACLB & Small Business Finance Association.
Henry Abenaim has combined backgrounds in finance and using software and technology to improve the industries he has worked in. He founded and is currently CEO of Fundingo, a loan management software company based in Los Angeles.
8 Cited Research Articles
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- Borzykowski, B. (2022, September 20). The Ultimate Retirement Planning Guide for 2022. Retrieved from https://www.cnbc.com/guide/retirement-planning/
- Internal Revenue Service. (2022, June 15). Have You Had Your Retirement Plan Checkup This Year? Retrieved from https://www.irs.gov/retirement-plans/have-you-had-your-retirement-plan-checkup-this-year
- Gravier, E. (2021, October 17). These Are the Only Times It’s Smart To Make Changes to Your Investment Portfolio. Retrieved from https://www.cnbc.com/select/good-times-to-make-changes-to-investment-portfolio/
- U.S. Department of Labor. (2021, September). What You Should Know About Your Retirement Plan. Retrieved from https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/what-you-should-know-about-your-retirement-plan.pdf
- CNN Money. (n.d.). How Often Should I Check on My Retirement Investments? Retrieved from https://money.cnn.com/retirement/guide/investing_basics.moneymag/index9.htm
- Fulton Bank. (n.d.). 5 Reasons You Should Review Your Retirement Plan Every Year. Retrieved from https://www.fultonbank.com/Education-Center/Retirement/Review-your-Retirement-Plan-Annually
- Social Security Administration. (n.d.). Estimate Retirement Benefits. Retrieved from https://www.ssa.gov/prepare/plan-retirement
- PAI. (n.d.). Three Important Reasons To Review Your Retirement Portfolio on a Regular Basis. Retrieved from https://www.pai.com/blog/3-important-reasons-to-review-your-retirement-portfolio-regularly
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