Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
January is a good time to make an appointment with your financial planner—or find one if you don’t already have one—to make sure your retirement plan is growing in the right direction.
1. What’s the current value of my retirement investment portfolio?
“People often have little idea of how much their retirement portfolio is worth,” says Perry. Ideally, you should look at your overall balance once a year and compare it to previous years. You may be reviewing more than just your work 401(k) plan; if you have personal investments or savings you’ve earmarked for retirement, your planner will tally these up with you as well.
Once a year is usually often enough to review your portfolio, says Perry. This helps you maintain a long-term view of how your investments are doing. It can also reduce your financial anxiety. “Annual reviews help mute the short-term market noise that you can get from the 24-7 financial and political media,” he says.
2. How much annual income will I need in retirement to cover my expected living expenses?
Your advisor can help you make an educated guess about how much you’ll spend in retirement. Then—particularly if you’re within 15 years of retirement—your advisor will likely take your retirement portfolio balance and multiply it by 5 percent (4 percent if you want to be conservative). The result will be how much you can withdraw from your retirement portfolio per year with a high likelihood of it lasting 30 years. For example: a $300,000 portfolio x 5 percent = $15,000/year of spendable money. According to Perry, this concrete information tells you whether you’re way ahead of the game (“That amount of income is great for me! I don’t need to save another dime!”); on track (“If I maintain my savings rate and get a reasonable return, I’ll be within the ballpark”); or whether you need to take action and save more.
3. Is my retirement portfolio properly diversified among stocks, bonds, cash, and so on? And is my money invested appropriately (not too conservatively or aggressively) for my life situation?
A good planner will help you determine the mix of investments that will allow you to reach your retirement goals with the least amount of risk, says Perry. Diversification is a big part of that. A diverse portfolio helps provide exposure to stocks so your investments at least keep pace with inflation—and possibly grow. Investing in less-volatile bonds and cash helps preserve your capital and protects your portfolio from wild swings in value.
Once your portfolio diversification is set, it generally shouldn’t change based on external factors (such as financial market returns or geopolitical risks). However, it can and should change based on personal factors. This is why it’s smart to visit your financial planner every year. For instance, did you or your spouse lose a job or experience a change in salary? Did you come into an inheritance? Have you gone through a divorce? Any of these things can change how much risk and return you seek with your retirement portfolio. Your planner can help you make adjustments.
4. How much am I paying for my investments? Are the costs reasonable?
Over long periods of time, investment fees can make a significant difference in your portfolio’s value. Perry says one major way to reduce fees is to favor index funds over actively managed funds. Your advisor should review your ongoing investment costs. You also face transaction fees for buying and selling investments. Your advisor can help you look for ways to avoid or reduce these costs.
5. Should I consider doing a Roth IRA conversion?
This entails converting all or part of a traditional IRA to a Roth IRA. With a conversion, you pay income taxes today on the converted amount. The money grows tax-free in the Roth IRA and can be withdrawn tax-free in the future. Perry says a key criterion (though not the only one) for determining if a Roth IRA conversion makes sense is if you expect your income tax rates to be higher in future years compared to the current year. This is a complex issue that you should discuss carefully with your planner.
Investing a portion of your money in a Roth IRA is also a way to make sure your retirement portfolio is tax efficient, meaning that you are keeping an eye on how much your investments will cost you in taxes, both now and in the future.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.