Check your retirement plan progress in five steps

When do you want to retire? Where will you live? What kind of lifestyle are you envisioning? The answers—which may change over time and as you get closer to retirement— will impact your retirement strategy decisions.

For example, if your goal is to retire early and do lots of traveling, you’ll want a bigger income stream. You may need to save more now and increase your potential for higher returns by taking a more aggressive investment approach. But if current lifestyle responsibilities are limiting how much you can contribute or keeping you from taking on more investment risk, you may need to rethink your retirement age and lifestyle expectations. It’s about finding a balance between your future goals and your current financial situation. You’re in control because you can continually refine your choices from both ends of the journey.

You’ll likely get most of your retirement income from Social Security and personal savings, including employer-sponsored retirement plans. To estimate your Social Security benefits, go to the Social Security website and set up a my Social Security account. This will allow you to view your statement and see your projected benefits at various retirement ages.

One sure-fire way to get closer to your retirement goals is to regularly contribute more to your retirement plan. Increasing your contribution rate by just 1% each year may make a big difference in your account balance at retirement. If money is tight at the moment, contribute as much as you can, and make a commitment to increase your contributions when your financial situation improves.

Do you have an idea of the potential returns you can expect from your current investment mix? Your objective is to maximize returns while managing risk. One way to do this is to maintain a diversified portfolio by investing your retirement savings across stocks, bonds and cash investments. A financial professional can help with this.

A general investing rule of thumb is to gradually reduce your investment risk—meaning less money in stocks relative to bonds and cash investments—as you get closer to retirement. This may help protect against a potentially large account value drop just as you need to start withdrawing from your retirement savings. If you are invested in a target date fund, this gradual risk shift happens automatically.

The Retirement Income Calculator can give you a snapshot of where your retirement planning strategy stands today. You can plug in different parameters, like retirement age, contribution rate, and investment returns, and get an estimate of your balance year-by-year leading up to retirement and beyond. 

Each time you run a projection, it gets translated into an estimate of yearly and monthly retirement income. It’s fun to see how contributing more today may impact your income tomorrow. Working in collaboration with a financial professional, the calculator can help you fine tune retirement planning choices and give you the best opportunity to achieve your retirement goals.

In addition to monitoring retirement plan contribution rates and investments, periodically confirm that the personal information listed in your financial accounts—including your address, phone number and email—is up-to-date. It’s also important to check that you have the right people designated as beneficiaries, particularly if you’ve recently experienced a major life change such as a marriage, birth of a child or a divorce.