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A Spring Cleaning Checklist for your Retirement Portfolio


Get out the broom, wash cloth, and buckets – it’s time for the annual spring cleaning ritual.  Try adding one more item to your list – take a careful look at your retirement portfolio and see if its time to make a few tweaks.

Here is a list of items you may want to consider:

1. Rebalance Your Asset Allocation

The markets have moved quite a bit over the past year, so you may want to take a close look at your mix of investments across stocks, bonds, and cash and adjust as appropriate.

2. Adjust Your Savings and/or Spending Levels

Check the balance of your savings and the rate at which you are burning through it or adding to it – if you extend this trend, are you on pace to get what you need from this portfolio over the long term?  If not,  adjust as necessary.

3. Review Your Protection Strategy

These are uncertain times, so it is important to make sure that you have appropriate protection in place to provide for surprises that may have an adverse impact on your finances.  Do you have enough emergency savings set aside (standard rule of thumb is six months of income)?  Are you comfortable with the financial hit if the stock market were to drop 35%?  If not, you may want to adjust your asset allocation or purchase put options to protect against the risk of loss.  Are you on taking the necessary steps to provide for your long term income needs for the later years of retirement?  If not, you may want to consider building up a source of deferred income, perhaps through immediate annuities or longevity insurance.

4. Do You Have a Comprehensive Plan?

Not everyone is an expert in financial planning, so it is helpful to get an outsider to give some advice on your game plan.  It is common for people to focus on a few things that, for a variety of reasons, tend to be more front of mind – a good financial adviser can give a different perspective and point out some areas that you may have overlooked.

5.  Check Your Debt Situation

Take a good look at your debt situation – are you paying down balances with the highest interest rate first?  Is spending being kept under a budget or do you need to tighten this up?  Do you have a plan to get debt to a certain level over a specific time frame, and a way to get there?  It not, this may be a good place to focus your energies.

6. Check Your Fees

You should also carefully review the fees that you are paying on all of your investments. For mutual funds and ETFs, you can find these in the most recent prospectus; if you are using a brokerage account you may need to go back and review the statements that you have been provided over the past year.  Fees can rob you of a big chunk of your returns, so be sure that what you are paying is competitive and, if not, make a move to a fund that offers lower fees.

Posted by

John Bevacqua on March 17, 2012

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