Planning for Life Events
In order to maximize your quality of life in retirement, you need a complete financial picture. Your 401(k) and other retirement accounts should not be viewed in isolation, but rather as parts of your complete financial picture. Some important issues to consider include insurance planning, funding for your children’s education, managing debt and estate planning.
All of the factors should be reflected in your risk profile, as this will become the outline for the recommendations provided by 401K GPS. Below, we take a look at some important events to better understand how they can impact your retirement plan.
Children's Education
If you are committed to providing funding for your child’s education, you could be forced to take on more risk than is appropriate to make up for any retirement funding shortfall. Don’t neglect your own retirement and funding your 401k when saving for your child’s education (visit the Life Planning section in the 401K GPS Knowledge Center for more information on college savings options).
Managing Debt
It is crucial to formulate a budget at any age and have the discipline to stick to the plan. The importance of managing debt increases as you get older, as you will have less earning time to make up for any shortfalls. Carrying a high debt level, which can include mortgage debt, car loans and credit card payments, can force you to be more aggressive with your 401K balance than is appropriate for your risk tolerance. Usually, the less debt you have going into retirement, the better your chances for realizing the lifestyle you envision. Also, remember to pay yourself first to take advantage of corporate matching and tax benefits.
Career Change
Better career opportunities may come along that could result in you switching employers or careers. Perhaps your company is forced to downsize and make personnel cuts. If either case arises, don’t neglect your 401K account. Moving the account to a rollover IRA will result in more investment options and better flexibility than leaving it under your former employer.
Please contact us if such an event occurs as one of our 401K GPS team members can council you regarding your options.
Social Security Benefits
When contemplating your distribution plan, consider the benefits and timing you will receive from Social Security. You will need to integrate your distributions from your 401K with your Social Security payments to optimize your retirement income. A financial planner may be able to assist you with integrating these events into your overall financial plan. For more information on financial planning, selecting a financial advisor and more, see our
Life Planning section in the 401K GPS Knowledge Center.
We recommend consulting with a tax or financial advisor to obtain appropriate advice regarding your comprehensive retirement, investment, and tax planning.