Your Biggest Retirement Plan Assets

With the stock market experiencing volatility due to COVID-19, and with economic uncertainty high, you may be concerned about the health of your retirement plan assets. Yet rather than looking at the situation abstractly, it’s important to scrutinize the different areas that make up your retirement plan assets to get a sense of where you stand and how you can reach your retirement goals.

In particular, you should think about the following five types of retirement plan assets, some of which tend to be overlooked, to see whether you’re properly accounting for these assets and decide whether you want to make any adjustments. These retirement plan assets include:

1. Employee Retirement Plans

Whether you have a defined-contribution retirement plan such as a 401(k) or a defined-benefit plan such as a public pension, your retirement account at work likely marks one of the largest—if not the largest—components of your retirement portfolio. While most employees understand the importance of these retirement plan assets, some investors overlook the importance of choosing retirement plan funds.

Instead of just going with the default option or spending a few seconds scanning a list of funds, take some time to assess all your options and think about how your needs might change as your account grows and you get closer to retirement. For example, you might be inadvertently taking on more risk than you’d prefer if you’re not diversified across asset classes.

2. Your Home

If your employee retirement plan isn’t your largest retirement asset, then your home very well could be. While you may not have any plans to sell your house anytime soon, it’s essential to account for the value of your home and think of it as an asset.

The value of your home can change significantly, so it’s important to review this asset on an ongoing basis and not make too many assumptions. However, it’s good to keep in mind that you could eventually convert the equity in your home into cash. When you do the math, you might find that downsizing in retirement could be the difference between being able to fund the lifestyle you want versus having to cut back your budget.

3. Social Security

Too often, investors and their financial advisors brush off Social Security as a retirement asset, thinking that it’s just a couple of thousand a month and doesn’t compare to what you’ve built up in your retirement savings accounts.

Yet ignoring Social Security means ignoring a retirement asset that could be worth around half a million or more over your lifetime. Those monthly checks add up and need to be accounted for carefully. If your financial advisor is not giving you a level of respect around your Social Security benefits and instead is just looking at what you can invest in, they may not be giving you the full spectrum of financial planning support you deserve.

For one, you need to decide when to start taking Social Security to optimize the amount of income you can receive in a way that fits with your lifestyle, including accounting for factors like whether your spouse would also receive benefits when you collect Social Security. Then, as you start receiving Social Security income, it’s essential to build this cash flow into your retirement plan to fit your spending, saving, and investing goals.

4. Your Future Savings Potential

Although this money isn’t sitting in your retirement accounts yet, you can still think of your future savings potential as an asset. This future savings potential is based on how your cash flow could significantly improve in your 50s or 60s. At this time, your income might be higher than ever, your kids might be supporting themselves, your house might be paid off—and all these factors together mean you may save significantly more each month than you could before.

Planning for this savings potential can help you put that money to work once it’s available to you. You’ll have a good sense of how you want to invest future savings and can decide in advance if you want to earmark some savings to treat yourself and your family. In contrast, if you just go along for the ride and suddenly start seeing more money in your checking and savings account, you might spend more than what you would ideally like to when thinking about retirement planning.

5. Smaller Accounts

Beyond your current employee retirement plan, you might also have several small retirement accounts floating around. These can include a 401(k) from a previous employer, a Roth IRA that you contributed to for only a few years, or a brokerage account that you no longer actively use.

Believe it or not, many investors dismiss these small accounts as unimportant or insignificant, perhaps because they’re not actively paying attention to them. Yet when you add them all up, they can account for tens of thousands of dollars or more that should be accounted for as part of your overall retirement plan.

Even if that might not seem like much money in the context of a 401(k) with $1 million in it, for example, having $30,000 across smaller accounts could still be significant. That money could be used to pay for a large expense like your child’s wedding, so it should very much be considered part of your financial plan and support your financial goals.

Take Inventory of Your Assets

Now that you have a sense of some of the biggest assets in your retirement plan, including some that you might have overlooked, it’s important to take inventory of your assets and plan accordingly. There’s no time like the present to review your accounts and make changes if necessary to help you reach your financial goals.

If you’d like to discuss your retirement plan assets in more detail, our financial advisors in the Richmond, VA area are available to offer guidance. You can call us anytime at 804-777-9999. Or simply text the word “tips” to that number, and we’ll be sure to respond back to you shortly.

You can also listen to our podcast where we discussed retirement plan assets in more detail. To discuss your personal situation with a financial advisor, schedule a complimentary 15-minute phone call.



The information contained in this presentation does not purport to be a complete description and is intended for informational purposes only. Any opinions are those of the content creator and not necessarily those of the named advisor(s) or JWCA. This information is not intended as a solicitation or an offer to buy or sell any security or investment product. Information is solely intended for recipients in jurisdictions where the named advisor(s) are licensed to engage the investing public. Investments and strategies mentioned may not be suitable for all investors. The S&P 500 and other such indices are unmanaged, do not incur fees or expense, cannot be invested into directly and individual investor’s results will vary. Past performance is no guarantee of future results. As with all investments, various risks may exist and JWCA recommends you consult with your financial advisor prior to making any investment decisions. Advisory Services offered through J. W. Cole Advisors, Inc (JWCA). Financial Dynamics & Assoc. Inc and JWCA are unaffiliated entities.

This material was prepared by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax or legal advice.