When and How to Update Your Retirement Plan

You worked hard to develop your goals and figure out how to reach them, perhaps and hopefully with the help of a professional financial planner. Congratulations on taking the first step towards securing your financial future by establishing a retirement plan! While creating a financial roadmap is crucial, it's equally important to recognize that life is dynamic, and your retirement plan should adapt accordingly. Regularly reviewing and updating your retirement strategy is essential to ensure it remains aligned with your evolving goals, financial situation, and market conditions. 

Let's explore the key indicators and best practices for knowing when and how to update your retirement plan, empowering you to stay on track towards a comfortable and fulfilling retirement.

Generally, when you've had a major change in your career, that's a good time to talk about your strategy. That change can be getting a new job, quitting, or being laid off. It can also be a promotion or a raise. Whether or not you've had a change in your main job, starting or selling a business enterprise is another cause for conversation.

Situations in which there's been a major change in your or your family's lives are good times to reconnect with your financial professional. Essentially, these events are situations in which your beneficiaries might change. These include marriages, divorces, births, and deaths.

Other situations that would necessitate a review could be as simple (or complicated) as moving to another state, country, or even just up the street. If one of your family members has become a caregiver, that could also be an important conversation starter. Some conversations will happen at set times, such as when you or your spouse turn the key ages of 59, 65, and 70½. Another time to notify your trusted financial professional is if your health has deteriorated; this includes mental and emotional health.

Many of these conversation-worthy situations are financial or investment-related. For example, if your risk capacity has changed. What does that mean? It means a change in your ability to weather a financial risk, such as having more cash or wealth at your disposal through some sort of windfall. This can also go in the other direction if you experience a considerable loss. Another consideration is whether the value of your assets has changed, altering your wealth profile for good or for worse. How about gifting, whether within your family or to a charity? A significant gift, such as a philanthropic endeavor, would be a reason to look at your strategy. Have you purchased or sold a major asset on the level of a house or business? How about a major change to your debt profile, whether it's an increase or a decrease?

A review of your retirement plan can become necessary even with what may seem like a simple change of mind about your estate strategy, including changing beneficiaries or altering gifts you intend for charities and other entities.

There are other reasons to take another look at your financial strategy that may have nothing to do with your financial situation directly, but instead relate to outside factors. A major change in tax policy or law is one example. Maybe you've made some changes to your legal and financial team or plan to name a different executor to your will. Perhaps you've had a change in your household that has upsized or downsized your lifestyle. Or maybe you've had a major mishap, like misplacing or losing important documents.

Finally, there's always the possibility that it's been a year or two and it's just time to look over your strategy and see if there's anything that needs your attention. You may discover new goals or some adjustment may be necessary to ensure you're still on track toward achieving the goals you already set.

Whatever the reason, big or small, your trusted professional financial planner will be more than happy to help you through whatever concern or transition you're facing. Maintaining a well-crafted retirement plan requires diligence and periodic evaluation. By staying vigilant to changes in your life circumstances, financial goals, and market conditions, you can ensure that your retirement strategy remains relevant and effective. Remember, updating your retirement plan is not a one-time task but a dynamic process that evolves with you over time.

Seeking professional advice can help navigate the journey to retirement with confidence and peace of mind, so go ahead and...