Objective information about financial planning, investments, and retirement plans

Its 2011, What Do I Do Now? – Retirement Plans


There have been a seemingly endless number of articles and cable news segments about what you should do financially in 2011.  Well its now 2011 and here are a few things I suggest on the retirement plan front.
401(k) Participants
·    Take a look at your account.  December was a good month for stocks; this may have caused your allocation to be too heavily weighted here.
·    Did your plan change its investment offerings?  Have you reviewed these new funds to see if they fit into your strategy?  Typically if a new fund is offered any money that is left in the old fund is automatically mapped over to the new fund. 
·    When you review and rebalance your 401(k)account do so in the context of your overall financial situation.  Consider outside investments such as old 401(k) plans, retirement plans, a spouse’s retirement plans, IRAs, taxable accounts, and the like.  Ideally do all of this in the context of your comprehensive financial plan.
·    If your employer offers access to direct, unbiased advice take advantage.  If it is free or at least inexpensive what do you have to lose?  Even if you are a do-it-yourselfer there is nothing wrong with a second opinion.
·    If your employer offers advice via an advisor who stands to benefit financially based on where and how you invest, I’d think twice.
·    Full disclosure, I am launching a service to provide fee-only, unbiased advice to 401(k) participants so I am hardly unbiased here.
·    While Target Date Funds might be the “easy” choice, I’m generally not a fan.  At the very least, look carefully at how the TDFs in your plan invest, how this allocation does or doesn’t fit with your goals and risk tolerance, and whether there is serious overlap with your outside investments.
·    Start or continue to fund a Solo 401(k).  If this plan fits your situation it can be an excellent vehicle to accumulate retirement assets to help reap the rewards of all of your hard work. 
·    Contributions to a Solo 401(k) can be made pre-tax or a Roth option can be used.
·    If you haven’t made a 2010 retirement plan contribution, consider funding a SEP IRA.  Contributions for 2010 can be made up to the date you file your return including extensions.
·    If your cash flow and income can support it, look into a Cash Balance Pension Plan.
·    Various retirement plans for solo and small businesses have different attributes.  Your best bet is to consult with your financial and/or tax advisor to see which plan(s) are best for your situation.  Whichever plan you choose, make sure to fund a retirement plan for yourself in 2011.  You work too hard not to.
To all readers of this blog and those of you who follow me on various social media platforms I wish you all a happy, healthy, and prosperous 2011.  If I can ever be of help in any way please feel free to contact me.

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  1. Hi Roger, Nice list of steps. I'm for any recommendations that can streamline one's finances. Good luck the the new retirement service. THERE IS DEFINITELY A NEED!

  2. Barbara thanks for the comment. We hope we can gain some traction with RFA there truly is a need. 401(k) participants are confused about where to put their savings and if they will be able to retire.

  3. Richard Stooker says:

    Hi, Roger,

    Good luck on your 401K service. I don't know what your marketing plan is, but it seems you could try to offer them through an employer en mass to all employees. I believe some employers are flirting with future lawsuits over their failure to adequately advise employees about their choices. Hiring you could help them deflect such lawsuits.

    Too many people don't have an overall financial plan, or understand the need for one. Their asset allocations are a mess because they don't look at the totality of their portfolios.

    I agree that Target Date Funds are too one-size-fits-all. It doesn't.

    I believe too many people are scared into buying too many bonds too early. After all, 65 is the beginning of living on your retirement funds, not the end.

    With so many people living so much longer, people retiring must plan for their portfolios to last at least another twenty years, and indefinitely is even better. Medical science is advancing so fast that eighty may soon be the next fifty — or thirty.

    But you can't get the growth and inflation protection you need from bonds.

    Too many investors are preparing to fight the last war, not the one that's coming.


    UK Real Estate Investment Trusts

  4. Rick thanks for your comment and for visiting the site. You are correct and we are in the process of getting our message out to companies in the hope they will want to offer to their employees. There is a real need for investment and retirement planning advice among 401(k) participants, we want to be part of the solution to this problem.

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