The Simple Six-Step Retirement Checkup

The turbulent market in 2018 has complicated many people’s retirement planning. It has also made it more important than ever to check your current plan to see if you’re on track towards meeting your investment goals.

If you have a lot of time until you retire, small tweaks in savings or investment strategy can make a big difference. Retirement just around the corner? Sometimes a few changes to your plan now can help you cross the finish line, even if market conditions are less than fully cooperative.

Here’s a simple six-step retirement plan checkup:

1.   Determine where you stand. See whether the amount you’re saving and investing is on pace with the money you’ll need to retire (with some margin for error). You can find numerous calculators online to help. Also, some investment advisory accounts, like Morgan Stanley Access Investing, inform you automatically when you aren’t meeting your goals. If you have accumulated several different retirement accounts from past jobs, however, knowing where you stand may be harder than it should be. Consider working with a Financial Advisor with access to sophisticated tools, or consolidating your retirement accounts.

2.   If you’re off track, figure out why. Are you saving as much as you planned? Are you maximizing your contributions to your employer-sponsored retirement plan or individual retirement account (IRA)? Is the amount of money you’ll need in retirement increasing? If you’re not on course because your investments aren’t performing well, see if you should make a change to your asset allocation strategy, or to the specific investments you’ve chosen. If your investments are not performing at least in line with benchmarks, it may be best to review the latest research in the context of the original rationale for the product. Assuming that checks out, it may be wise to hold on through a period of volatility, as chasing top performers may be a poor way to make decisions.

3.   Decide how to get back on track. That could include revisiting your goal, for example by stretching out the time horizon until you retire or reducing the amount of money you plan to spend in retirement. It can also mean increasing portfolio risk, though only after careful consideration of your risk tolerance. It could be that the most palatable option is a little of all three, which makes the magnitude of any one change smaller. If you don’t see a clear path to reaching your goals, consider consulting with a Financial Advisor who can help steer you in the right direction.

4.   Take advantage of ways to improve returns without magnifying the risks. These strategies can include options to minimize taxes, such as “income smoothing” and tax loss harvesting. Insurance can also play a role. If used correctly, long-term care, life insurance and annuities have the potential to bolster your retirement plan due to their tax treatment and risk mitigation features.


5.   Tally up your income sources. If you are retiring soon, you need to get the most out of all your sources of income. That could include strategies for claiming Social Security and traditional pension fund payments, and where applicable, approaches to help you secure or maximize rental income. If your reliable sources of income are not significant as a portion of your needs, you may want to add more conservative income-oriented investments, such as dividend paying stocks or bonds.

6.   Assess the risk level of your plan. If you run through these steps and realize that you are on target to retire in a few years with room to spare, consider reducing the amount of risk in your portfolio. The current business cycle is in late innings. The stock market was rocky in 2018 and, while in our opinion, it doesn’t appear that recession is imminent, a downturn may materialize in the next few years.

Checking in on your retirement plan doesn’t just entail making sure you are saving enough money. It also means helping ensure the savings you’ve worked so hard to accumulate will be there when you need it. 

Tax Disclosures:

Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at . Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

Investing Disclosures:

This material does not provide individually tailored investment advice.  It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.  The securities discussed in this material may not be suitable for all investors.  Morgan Stanley recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Financial Advisor.  The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

Asset allocation does not ensure a profit or protect against loss in declining financial markets.

Insurance products are offered in conjunction with Morgan Stanley Smith Barney LLC’s licensed insurance agency affiliates.

Equity securities may fluctuate in response to news on companies, industries, market conditions and general economic environment.  Companies paying dividends can reduce or stop payouts at any time.

Fixed Income investing entails credit risks and interest rate risks.  When interest rates rise, bond prices generally fall.

Past performance is not a guarantee of future results.

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