- You set your plan assuming a 7 percent return.
While that 7 percent number has been a rule of thumb for years, you may want to ratchet it down to 6 percent to be safe—especially as past performance of assets may have been under 7 percent. - You haven't adequately considered health care cost inflation.
Health care may be your biggest expense, and you want to be sure that you can stay even with costs as they rise. Check to see if what you calculated for health care costs when you first created your plan matches the current projections for health care and medical costs. - Your asset allocation hasn't changed as you approach retirement age.
Your assets should become less risky as you get closer to needing liquid assets in retirement. But you need to make sure that your assets continue to grow even in retirement. Not doing so means that you are taking on what is called longevity risk, when you may outlive your assets. Keep a healthy allocation to stocks to help you stay ahead of inflation, especially health care inflation. - You haven't checked it in years.
Don't let your retirement portfolio go for five or 10 years without looking at it and checking its asset allocation. An annual check-up is wise. If you revisit your plan annually and find that your original calculations are falling short, you still have time to put money away and get back on track. You should review your current spending needs and try to put away more money than you are currently saving.
Here are four reasons you may want to check in on the growth of your retirement plan—and consider revising it.
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