Insurance and Financial Information

Our retirement accounts may lie around like unread magazines - something we will get to later but not now. A collection of IRAs and 401K (403B etc) plans are waiting for attention to ensure that the right funds and strategies are being applied. This is what will see us through our retirement and yet we put off dealing with them.

Your nestegg needs your attention. Increasing your returns by 6% doubles the size of that nestegg in a decade. There is a good chance that your neglected retirement plans could give you a higher income when it comes time to retire.

Fear driven from a lack of knowledge is the enemy. IRA's have too many options and 401K's may not have enough. In either case, not knowing what selections to make results in inaction and the retirement plans linger in the dark. Review your latest 401K statement (or IRA) to see what your three and five year annual rate of return is (ARR). If your ARR is below 3% there is upside for you.

To evaluate the potential upside, we are going to use a SIB - the simplest portfolios imaginable (Simpler Is Better). We take market indices for each of the market segments represented in the portfolio; no effort is spent in trying to pick the best stock; we take the whole market segment.

The simplest form of this strategy is to 'buy and hold' (Strategic Asset Allocation or SAA) the assets and only rebalance the asset ratios periodically.

Recently, SAA has been augmented with a more active strategy Tactical Asset Allocation (TAA) which is a 'buy and modify approach. You keep the same asset classes but you may change the ratios depending on market conditions. For example a portfolio with 40% bonds, 30% US stocks and 30% international stocks may see the bond and US stock ratios increased at the cost of the international stocks when international economies are weak.

A five asset class ETF SIB is compared against a leading 401K plan. To make the comparison personal, plug in your own numbers.

For example, an ex IBM employee has money in the IBM retirement plan. There is no activity so it's a strategic asset allocation (buy and hold). A good result for a moderate risk approach - assuming good asset allocation choices and occasional rebalancing would deliver results in the 5% range over a five year period. Contrast this with a five asset class SIB implemented with Vanguard ETF's with a moderate risk profile with tactical asset allocation -- 14% for five years with a moderate risk profile. So the difference between staying in and rolling over to an IRA is 9% a year - that difference doubles your money in eight years.

What to do? Find your latest 401K and IRA statements and see your annual rates of return - some sites will calculate that for you. Then compare what you are getting with what's possible. Finally decide what you are going to do about it. Remember, you are talking about your retirement.

MyPlanIQ the only provider of advanced investment strategies totally customized to personal risk profile and plan funds.