It may be confusing or difficult for some people to review their 401(k) plans regularly, but failing could cheat you out of scheduled retirement plans. Making regular payments into an account isn’t enough, even if it’s managed by a company and put aside in a special money market or similar investment portfolio rather than in an account at your local bank. If you aren’t keeping track of your money, it may not grow as expected.
Losing Your Money
The problem with unmonitored investment plans is that you don’t know where all the money goes. Nearly a third could be dedicated to paying management fees by a third-party firm controlling your portfolio. In a worst-case scenario, up to 80 percent of money put into a retirement plan could go toward paying an investment broker rather than getting saved for your retirement.
Most of this blindness isn’t due to a lack of interest. Statements and other information previously available to consumers regularly didn’t include where allocations were being made, so people had no way of knowing if their financial plans were on target.
Recalculating for Loss
This may hit some harder than others, as the Social Security Administration is already pushing back the retirement age, and people are being forced to work longer than before or accept a reduction in public benefits. This may be good for those whose money hasn’t been managed properly and may not yet have enough in dedicated 401(k) plans to retire comfortably.
“Retirement is ultimately a mathematical equation involving current income, current expenses, savings rate and future expenses,” said Robert Brokamp in a newsletter for The Motley Fool. “The more you can make now, and the more of that money you save, the sooner you can retire.”
If you are unaware of how well their retirement plans are fairing, now would be the time to seek out that information and get more involved in your financial future. If you aren’t sure how to change your strategy or what tools would best assist you, seek financial tips from an experienced planner or banking partner to ensure future monetary health.
Set Yourself Up for Success With First United Bank & Trust
First United Bank & Trust offers premier personal banking solutions to help set you up best for retirement plans. Contact us online or find your nearest branch to set up your account.