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Plan Well, Retire Well

Saving and investing your money

Steering Your Financial Ship

If you are like me you are saving for long-term financial security and retirement in your employer sponsored 401(k) or 403(b). While I keep an eye on how my funds perform on a quarterly basis, I generally examine the overall performance and allocation of my investment assets once a year. The purpose of this yearly allocation analysis is to simply make sure that the way my retirement plan investments are allocated actually matches up with my stated investment goals, time horizon and preferences regarding the amount of financial risk in my portfolio. To perform the analysis I meet with a representative of my investment company (TIAA-CREF is my company) and I utilize their software to check the portfolio allocation. Then I can rebalance the allocation of my investment assets, since over time differential growth (or reduction – ugh!) rates across the investments and changes in my time horizon imply the need to reallocate investments.

A second part of my yearly assessment is to run a retirement income projection. For this I have a simple spreadsheet model in Excel and I can also use a web-based tool on the TIAA-CREF website. The retirement income model takes my investment portfolio and then uses assumptions that I feed into it regarding the inflation rate and the rate of return on my retirement portfolio to provide an estimate of the income stream and retirement assets that I will have access to in my later years. This also gives me a check on my current level of savings and lets me ascertain whether I should increase my automatic savings contributions to my 403(b) or other retirement savings.

Consumer finance researchers have noted the fact that many personal investors never appear to adjust their asset allocation or change their retirement plan choices. It seems that many people launch their financial boat from the shore of their initial investment plan enrollment and never take steps to find out where they are heading once they are out to sea. These two steps give you simple actions that you can take to help steer your financial boat. Along with many financial advisors, I recommend that you assess on a yearly basis the allocation of your retirement investments and the overall savings rate that you are employing. What steps do you take to monitor and reallocate your investments? How do you assess whether you are likely to be saving at a sufficient level to meet your retirement goals? I would love to hear what actions you take to monitor and track your savings and investments. Please email me at if you would like to share your strategies.

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