9 Crucial Reasons To Do a Midyear Checkup on Your Retirement Plan

Taking stock of your retirement goals every six months may help you achieve the life you want after you stop working.
Updated June 6, 2024
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If you are looking forward to a stress-free retirement, saving money for that goal should begin when you start working. You should invest in your employer’s 401(k) plan or open an IRA as soon as you can. But don’t just set it and forget it.

You should also be proactive to be sure your money is invested in the right types of stocks, mutual funds, or bonds. And the only way to do that is to keep an eye on your portfolio.

Ongoing retirement planning allows you to consistently meet your goals while also making adjustments while there’s still time to make changes. Has anything changed in your life that warrants updating your plan?

Check these reasons to update your retirement plan now to ensure you’re on target.

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Determine how much you are investing in your IRA

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Are you going to meet your contribution objectives for the year for your IRA? Maximizing your contributions each year allows you to get the most out of your tax advantages as well as keep investing for the long term.

Take a look at your current contributions for the year. Individuals can contribute up to $7,000 in 2024 and an additional $500 if you’re 50 or older.

If you have a traditional IRA, you can deduct your contribution from your taxes for the year, but you’ll pay taxes when you withdraw the money in retirement. In a Roth IRA, you pay the taxes now and your withdrawals will be tax free when you make them during retirement.

Vesting your employer match

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Vesting is the percentage of ownership you, the employee, have in a 401(k) plan. Now is a good time to learn if the money your employer contributes to your account is fully vested.

Some companies give the employee a percentage of ownership each year until the employee is 100% vested and others may offer immediate vesting. Employees always own 100% of the money they contribute to the 401(k) plan.

If you leave the company, you may forfeit money that is not vested in the 401(k) plan.

Update your tax withholdings

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Though not directly related to your retirement contributions, the last thing you want at the end of the year is a big tax bill. It’s important to check your tax withholdings to ensure you’re having enough but not too much taken from your paycheck.

If you are withholding too much, you may want to make an adjustment and tuck the difference into your retirement savings, if possible.

To find out if you’re on track, use the IRS’s tax withholding estimator or speak to your tax professional.

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Understand your risk tolerance

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This is also the best time to consider your risk tolerance. Risk tolerance is dependent on various factors including your age and your ability to handle a serious financial setback.

When you’re young, you can take on more investing risk because you have a long time to recover from a down market. As you get older, shifting to more conservative strategies may help preserve your retirement investments in turbulent times.

It’s worth speaking to your financial advisor about how your current investments align with your age and objectives. Should you be a bit more aggressive now or pull back a bit?

Complete an investment checkup

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You don’t need to watch the stock market daily or check your portfolio performance every week, but you should evaluate your holdings at least once a year. Political upheaval, changes in the economy, or your own personal situation may affect your investments.

If you don’t have the time or interest to research specific stocks, mutual funds, or bonds, enlist the help of a financial advisor to look at your current portfolio. They will examine your asset allocation and help you determine whether to buy or sell certain investments. They can also help with the tax consequences of trades.

Adjust for major life changes

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Midway through the year, you may have experienced some changes in your life. Big differences, such as the birth of a child, marriage or divorce, or loss of an heir, can impact your retirement planning and objectives.

Beyond evaluating your investments, now is a good time to make changes to your will or update estate planning documents if you’ve had major life changes. You want to be sure they still accurately represent your wishes.

Check your savings in non-retirement accounts

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Retirement savings may be your priority, but it’s also essential to have solid savings and emergency funds. Are these funds holding up and meeting your objectives? If not, it may be time to tweak your spending and saving.

If you don’t have access to money for emergencies, you may be tempted to withdraw money early from your retirement accounts or take on more debt. Taking an early withdrawal may mean you’ll pay taxes and penalties as well as lose the growth potential for that money.

Eliminate your debt

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Many people start the year with the objective of paying down debt so they can save more. It’s a worthy goal but hard to do. Life’s probably thrown a few punches at you throughout this year, too.

Midyear is the perfect time to consider where you stand when it comes to debt payment and reduction strategies. The sooner you pay off your debt, the sooner you can focus on saving. There’s plenty of time to start making adjustments to spending now to help you reach your debt-free goal by the end of the year.

Consider early retirement

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Could you retire early? If you have worked and saved throughout your life and achieved your retirement goals, you may be able to say goodbye to the 9-to-5.

By doing midyear financial checkups, you probably know where you stand with those retirement objectives. And knowing how close you are to reaching your goals, you can tweak your spending, saving, and investments to get you to the finish line.


Bottom line

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By the time you’re in your 30s, you may have created a financial plan geared toward retirement objectives. But keeping tabs on your progress at least twice a year will keep you on track. If you find you’re not hitting your savings goal by June, you can make changes so that you’re on target by year’s end.

Take some time now to update your budget, savings goals, and income to better align with your retirement goals. Find new ways to build your wealth. And continue to be flexible with your retirement planning to keep you on track without overwhelming you in the process.

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Sandy Baker Sandy Baker is a has over 17 years of experience in the financial sector. Her experience includes website content, blogs, and social media. She’s worked with companies such as Realtor.com, Bankrate, TransUnion, Equifax, and Consumer Affairs.