Invest Time in Reading Your Retirement Account Statement


If you’ve been participating in your company’s 401(k) plan, chances are you recently received a retirement account statement in the mail. Federal law requires your employer to send you a 401(k) account statement at least once a year, but whether you receive yours annually or quarterly, do you really know how to read it?

Many statements are designed in a way that allows you to review and evaluate your account assets, current activity and investment information. Basically, they should show a summary of your account at the beginning and end of the quarter (or year).

The first thing you should do after opening your statement is confirm that the information shown is correct. Did all of the contributions from your paycheck make it into your retirement account? If your company offers a match, make sure those contributions are accounted for as well. Additionally, check to make sure that all of your personal information is accurate (your name, account number(s), Social Security number, etc.).

Pie Charts

Many statements will also include a pie chart, which breaks down your mix of stocks, bonds and cash. This is a very important tool in evaluating where you are in terms of your investment goals because it can help you decide whether or not you should rebalance your portfolio. For example, if a certain fund outperformed your other choices, it might be taking up a bigger percentage of your stock portfolio than what you had originally intended. In a situation like this, you may want to consider adjusting the mix to help bring the portfolio back to your original risk-tolerance level.

Additionally, rebalancing usually involves selling certain funds at their highs, and buying others at their lows — ensuring that you don’t have too much invested in one sector. While it’s sometimes hard to sell a fund that has done really well, just keep in mind that no single sector will remain up forever.

When reviewing your statement, you should also look at the values of your funds. In some cases, statements will compare your fund performance to relevant benchmarks. If it doesn’t include information about the total market’s performance, do some research on your own and compare your fund with a similar index or mutual fund.

Finally, even if your golden years seem light-years away, your account statement can really help you figure out if you’re on the right track for your retirement goals. Talk with your financial consultant to determine if you need to increase the amount you’re contributing to your 401(k).

And if you haven’t been reading your retirement account statement carefully, or worse, not contributing to a retirement plan at all, you’re really missing out. Planning for retirement and taking an active role in managing (and protecting) your finances is one of the most valuable ways you can prepare for the future.

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Lee Eisinberg is a Managing Partner with ABLE Financial Group in Scottsdale, Arizona. For more information, please call Eisinberg at (480) 258-6098. Investment products and services are offered through Wachovia Securities Financial Network, LLC (WSFN), member FINRA and SIPC, a registered broker-dealer and separate non-bank affiliate of Wachovia Corporation ABLE Financial Group is a separate entity from WSFN. © 2008 Wachovia Securities Financial Network, LLC.

Money Talks is a regular department in Agency Sales magazine. This column features articles from a variety of financial professionals and is intended to showcase their individual opinions only. The contents of this column should not be construed as investment advice; the opinions expressed herein are not the opinions of MANA, its management, or its directors.