5 Questions to Answer When Reviewing Your Retirement Plan

BY: MARK HARTNETTJD, CFP®, AEP®
Managing Director, Argent Family Wealth Services | (662) 550-4443

Congressional approval of the landmark Setting Every Community Up for Retirement Enhancement Act (SECURE Act) serves as a great reminder to retirees about the importance of revisiting your retirement plan to make sure you are meeting your financial goals.

The SECURE Act, which was signed into law on Dec. 20, 2019, is a game changer and ushers in some of the biggest improvements to our country’s retirement system in 13 years. For retirees, the Act increases the age for required minimum distributions and eliminates age restrictions for contributions to traditional individual retirement accounts (IRA). Those are two examples of how the legislation will affect retirement plans.

If you are planning to retire or are already retired, it’s always wise to reassess the underlying assumptions of your retirement plan with a financial advisor. Here are five questions to ask when reviewing your plan:

1. Are the underlying assumptions of your retirement plan still valid?

Times change and so should your retirement plan. The SECURE Act is a perfect example of how you need to review your plan whenever new laws are approved. One new provision in the Act limits the time frame for required minimum distributions for beneficiaries of an IRA. If your plan includes a “stretch IRA” strategy, you’ll need to make an adjustment. Remember, a retirement plan serves as the road map for your financial future. It will help manage risk and also take advantage of opportunities that come your way.

2. Have your healthcare needs changed?

Healthcare expenses will eat up a significant chunk of retirement savings so it’s essential that you watch those costs like a hawk. Even with Medicare, a healthy 65-year-old couple who both live into their late 80s will spend an estimated $606,337 on healthcare, according to HealthView Services, a health care cost-projection software company. Medical expenses are unpredictable. Adjust your retirement plan if your healthcare needs change.

3. Do you have a safety net for emergencies?

Everyone should have an emergency fund to pay for large, unexpected expenses or loss of income. Having sufficient funds set aside for emergencies is critical during retirement so you don’t tap into the savings you’ve worked so hard to accumulate. A widely used rule of thumb is to have 12-18 months of expenses in an emergency account.

4. Do you have the right investment portfolio structure?

For most people, investments held in retirement accounts – 401(k)s, IRAs and similar tax-deferred accounts – represent the majority of their nest egg. Your retirement is at risk if you are not protecting the value of those assets – and maximizing income and capital appreciation –through proper diversification. Have your financial advisor perform a stress test on a regular basis to make sure your investments can tolerate a major stock market correction.

5. Should you reassess your giving?

One of the greatest acts of kindness is giving to others in need. Consider making financial gifts now rather than as part of your legacy. Is there a family member who could use financial help? Is there a charity or special cause that would benefit from a larger donation now instead of smaller contributions over several years? A retirement plan check-up can help you transfer wealth in a meaningful, purpose-driven manner without jeopardizing your retirement.

A retirement plan is a dynamic document. Revisit it regularly – at least once a year – to see if you are still meeting your savings, spending and giving goals. If you’re off track, find out why so you can correct your course and feel confident about your financial future.

Mark Hartnett, JD, MBA, CFP®, AEP® currently serves as Managing Director of Argent Family Wealth Services, a division of Argent Financial. His practice focuses on providing leadership to financially successful families and family offices that desire to grow their family balance sheet through multi-generational planning in order to overcome the proverb “shirtsleeves to shirtsleeves in three generations.” Mark and his wife Jo-Shannon have been married twenty-eight years and live in Oxford, Mississippi, with their three children.