Spring Cleaning Your Retirement Plan: 5 Financial Tasks You Shouldn’t Ignore

As the seasons change, many people take the opportunity to declutter, reorganize, and refresh their homes. A similar approach can be useful for financial planning. Just as spring cleaning helps create a sense of order in your living space, reviewing key areas of your retirement plan can help you stay informed and organized. 

Retirement planning involves ongoing adjustments as market conditions, tax laws, and personal circumstances evolve. Regularly reviewing key areas of your financial plan can help keep it aligned with your goals and risk tolerance. 

Taking time to revisit your financial strategy this season may provide a clearer picture of where you stand and whether any updates are needed. A thoughtful review can help confirm that your retirement plan reflects your current priorities and financial situation. In this post, we’ll discuss five important areas to review as you spring clean your retirement plan.

1. Review Your Retirement Income Plan

Retirement income comes from multiple sources, and financial needs can shift over time. Reviewing where your income is coming from, how it is distributed, and whether any adjustments are necessary can help keep your plan aligned with your current situation. 

Evaluate Your Income Sources 

Take an inventory of all sources of retirement income, including Social Security, pensions, annuities, and withdrawals from investment accounts. Understanding how these sources contribute to your overall cash flow can provide insight into whether they still align with your needs.  

Assess Your Withdrawal Strategy 

Different income sources are taxed in different ways, which can affect overall cash flow. Reviewing how and when withdrawals are taken may help determine whether any adjustments are needed based on tax considerations or spending needs. 

Check Required Minimum Distributions (RMDs) 

For retirees subject to RMDs, reviewing distribution requirements can help confirm that withdrawals are in line with regulations. The rules around RMDs can change, so verifying the correct amounts and timing for withdrawals is important. 

Consider Any Recent Life Changes 

Health expenses, major purchases, or shifts in financial priorities may impact income needs. Reviewing these factors can help determine whether changes to spending, savings, or distributions are necessary.

2. Reassess Your Investment Portfolio

Market conditions, economic shifts, and personal circumstances can influence the effectiveness of an investment portfolio. Regularly reviewing asset allocation, risk exposure, and liquidity can help determine whether adjustments are needed. 

Review Asset Allocation and Risk Tolerance 

Investment portfolios are designed with a specific balance of assets, such as stocks, bonds, and other investments. Over time, market fluctuations can cause shifts in this balance, potentially changing the overall level of risk. Comparing the current allocation to the original strategy can provide insight into whether it still aligns with financial goals and comfort levels. 

Consider Portfolio Rebalancing 

Market volatility may cause certain investments to grow or decline at different rates, affecting the overall distribution of assets. Reviewing whether the current mix still reflects the intended strategy can help identify any areas that may need adjustments. 

Evaluate Tax Efficiency 

Tax implications vary across different types of investment accounts. Reviewing which assets are held in taxable, tax-deferred, or tax-free accounts can provide clarity on whether the portfolio is structured efficiently from a tax perspective. 

Assess Liquidity for Short-Term Needs 

Short-term expenses and unexpected costs may require access to liquid assets. Reviewing available cash reserves and easily accessible investments can help determine whether funds are positioned appropriately to meet near-term financial needs.

3. Refresh Your Estate Plan & Beneficiary Designations

Estate plans and beneficiary designations can become outdated due to life changes, financial shifts, or updates to legal and tax regulations. Reviewing these documents periodically helps keep them aligned with current circumstances. 

Update Your Will & Trust 

Wills and trusts outline how assets should be managed and distributed. Reviewing these documents can help confirm that they still reflect financial priorities, family dynamics, and any recent changes in laws or regulations. 

Review Beneficiary Designations 

Retirement accounts, life insurance policies, and bank accounts typically allow beneficiaries to be named directly. Checking these designations can help confirm that they are accurate and aligned with current intentions. Life events such as marriages, divorces, or the passing of a loved one may make updates necessary.  

Evaluate Power of Attorney & Healthcare Directives 

Power of attorney documents and healthcare directives designate individuals to make financial or medical decisions if necessary. Reviewing these designations and confirming that the chosen representatives are still appropriate can help avoid complications in the event of an emergency. 

Assess Charitable Giving Strategies 

For those who include philanthropy in their estate plans, reviewing donation strategies may provide insight into whether adjustments could be beneficial. Changes in financial situations or tax laws may influence how charitable contributions are structured.

4. Organize & Consolidate Financial Accounts

Over time, multiple financial accounts can accumulate, making it more challenging to track balances, monitor investment performance, and manage paperwork. Reviewing account structures and consolidating where appropriate may help streamline financial management. 

List All Accounts 

Compiling a complete list of checking, savings, brokerage, and retirement accounts provides a clearer view of overall finances. Identifying where assets are held can help with tracking balances and assessing whether accounts are still serving their intended purposes. 

Identify Redundant Accounts 

Having multiple accounts across different institutions can create unnecessary complexity. Reviewing whether certain accounts are still needed or if consolidating could simplify record-keeping may help with organization. 

Review Old Employer Plans 

Previous employer-sponsored retirement plans, such as 401(k)s or 403(b)s, may still be open. Comparing the benefits of leaving them as they are versus rolling them into an IRA or a current employer’s plan can provide insight into what best aligns with financial goals. 

Secure Document Storage 

Financial statements, estate planning documents, and tax records should be stored in a secure location while remaining accessible when needed. Keeping an updated record of account details and beneficiaries can help avoid complications in the future.

5. Optimize Spending & Cash Flow

Spending habits and cash flow needs can change over time, making it useful to review expenses and adjust as needed. Evaluating current spending, preparing for large costs, and maintaining accessible savings can help with managing finances effectively. 

Review Monthly & Annual Expenses 

Tracking regular expenses provides insight into spending patterns and where adjustments may be possible. Reviewing recurring costs, subscriptions, and discretionary spending can help identify areas that no longer align with financial priorities. 

Plan for Large Expenses 

Significant costs, such as healthcare, home maintenance, or planned purchases, can impact long-term financial planning. Setting aside funds or adjusting budgets in advance may help reduce financial strain when these expenses arise. 

Evaluate Emergency Savings 

Unexpected expenses can arise at any time. Reviewing available cash reserves and assessing whether they align with potential emergency needs can help with financial preparedness. 

Assess Withdrawal Strategy 

For those withdrawing from retirement accounts, evaluating withdrawal rates and tax implications may help with maintaining a sustainable income strategy. Changes in market conditions, tax laws, or personal circumstances could impact how and when withdrawals are taken. 

 

Conclusion 

Spring offers a natural opportunity to revisit important financial matters and make adjustments where needed. Just as a seasonal refresh helps bring order to your home, reviewing key areas of your retirement plan can help keep it aligned with your current goals and circumstances. 

Regular check-ins on retirement income, investments, estate plans, financial accounts, and spending can provide a clearer picture of your financial situation. Small adjustments along the way may help address changes in the market, tax laws, or personal priorities.  

For a structured approach, download your retirement spring cleaning checklist to review key areas of your financial plan. 

If you have questions or would like to discuss your retirement strategy in more detail, our team at Liberty Group is available to help.