Here's our last tip from a Kiplinger's article giving seven ideas for maximizing retirement savings:
Tip #7: Sell out and start fresh
Doug and Marlene Carnahan were doing a good job socking away money for retirement in their company 401(k) plans, taking full advantage of the maximum salary-deferral limits and additional "catch-up" contributions allowed for workers 50 and older. But neither was sure that they were investing money in the best way to fund their retirement, which they hope to begin in ten years.
So the Carnahans decided to start fresh and reallocate all the funds within their retirement accounts. There are no tax consequences for liquidating investment positions in a 401(k), as long as the money remains in your retirement account. "We both have excellent 401(k) plans, and both our companies offer matching contributions," says, Doug, 52, a computer engineer with Fujitsu in Kansas City. "But I have 60 funds to choose from. How do I pick the right ones?"
Despite online retirement-planning tools and general guidance on diversifying among asset classes, Doug's 401(k) plan still lacked one thing: specific advice on where to invest his money. So Doug and Marlene, 52, decided to pay for personal guidance from Smart401k. They filled out online questionnaires about their retirement goals, their time frame and their feelings about investment risk. Then they sent their plans' fund choices to Smart401k, which recommended the six best funds in each of their plans to diversify their investments. Smart401k charges $200 per year per person for the service, which includes quarterly reviews; family members in the same household get a 20% discount, so together the Carnahans pay $360 per year.
Doug and Marlene's goal is to double the size of their $600,000 retirement portfolio over the next ten years. "Smart401k put us on the right track," says Doug. "When I was doing it all myself, I was seeing more losses than gains. With its recommendations -- including funds that cover big companies, small companies, international stocks and some bonds -- I've done much better."
I think it's always a good idea to regularly review the performance of your investments and adjust them as need to maximize returns.
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