Have you been undermining your current retirement planning strategies simply by not paying enough attention to your financial portfolio? Apparently, that seems to be what is happening across this country.
A recent study from the nonprofit Employee Benefit Research Institute unearths some rather fascinating facts regarding the financial trends and strategies that are now influencing retirement savers. As a result, it may just put a spotlight on what you are doing with your own clients in this regard.
For one, EBRI’s 2002 Retirement Confidence Survey reveals an apparent discrepancy between many expectations for retirement and the actual preparations for it. For example, although almost two-thirds of Americans continue to save for retirement, fewer than one in three have actually calculated how much money they will need. To put it another way, two-thirds of today’s workers don’t have the basic information to even determine what their retirement savings goals may even be.
The survey also looked at the connections between an investor’ so-called "financial personality" and the retirement planning initiatives. Those who take an active role in planning and investing are the most optimistic about their future.
Other personal and lifestyle considerations may deserve your attention, too. For instance, has an estimated retirement date changed in the past year or so or since you last rebalanced the portfolio? Has a family life or career taken any new roads that might just affect any retirement plans?
Naturally, changes don’t always come from within. The need to review a portfolio arises when investment gains or losses have caused original allocations to shift, or to become "unbalanced." For example, if your strategy calls for 75 percent of a portfolio to be devoted to equities, you should check to make sure that recent returns haven’t significantly increased or decreased that allocation.
Recent market events can also serve as a reminder about the importance of maintaining a diversified portfolio and a disciplined, long-term outlook. Try to avoid the high-profile mistakes others have made: one is ignoring the benefits of diversification and instead investing too heavily in a single security, such as company stock issued as part of an employer-sponsored retirement savings plan.
The bottom line is that with times changing rapidly, you must make sure that your clients’ retirement portfolios (and even your own) remain on the right track.
