Retirement may not be on your radar if you are still working and are a long way from the day when you can quit for good. But it should be. You need to work toward retirement every year during your career if you want to be financially secure as a senior.
Obviously, this means you need to save a good amount of money in your 401(k) each year so your investment accounts provide the necessary income to support you. But you also need to go beyond just making regular contributions to your retirement plans in order to avoid financial struggles in your later years.
So, what should you be doing? Here are retirement planning tasks that every working American needs to check off their list now so that they can be on track for the security they deserve once their working life is in the past.
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1. Check your Social Security earnings record to make sure you get credit for earnings
One of the first and most important tasks to do on an annual basis is to check your Social Security earnings record. This is a recording of the amount of money you earned and paid Social Security tax on.
In order to check your record, you'll need to log in to your my Social Security account. While your earnings records used to be mailed to you, that no longer happens automatically unless you are 60 or over and don't have an online account. For most people, logging in online is the best and fastest way to confirm your earnings history, and if you don't already have an account, you should create one.
Once you've logged in, you can see the amount that your employer reported to the Social Security Administration for this year and for past years. It's critical that this amount is accurate and shows the full amount of wages you were paid, as your Social Security benefits are based on the average wages shown in this record. You don't want to shrink your benefits because of missing or incorrect information.
If you do spot a problem with your data, you'll need to contact the Social Security Administration (SSA). However, the SSA recommends that you first find data showing why the record is incorrect and what the right amount should be. This includes gathering evidence including pay stubs or W-2 forms.
Since most people don't hold on to these things indefinitely, it's really important that you check your earnings record each year. That way, as soon as you spot a problem, you can correct it while the information about your earnings is still fresh in your mind -- and while the paperwork needed to make corrections is still easily accessible.
It's far better to correct a problem now than to find out in a few decades that your employer misreported your earnings and your Social Security benefits are smaller because of it.
2. Rebalance your portfolio
Rebalancing your portfolio is another task that you need to do annually. This involves confirming you have the right asset allocation in your 401(k), IRA, and other accounts where you are invested.
Your risk tolerance will change over time as you get closer to retirement, so you may need to move some money out of equities so you have less exposure in case a downturn happens when you're getting ready to begin relying on your retirement savings.
As some of your assets perform well and others perform poorly, you could also end up with too large a percentage of your portfolio being concentrated in one particular type of investment. This could also create an outsize risk that you can't afford to take with your retirement funds.
When you rebalance, you can ensure your money is appropriately allocated so you have a good mix of diverse investments that's appropriate to your retirement timeline.
3. Confirm you're on track for your goals
The last key step to take each year is to make sure you're still on track to accomplish your goals. This can involve:
- Reviewing the amount that you'll need saved to make any necessary adjustments. For example, if you're hoping to push up your retirement by a year or if you've dramatically increased your income and living standard, you may decide you need to set a higher retirement savings target.
- Running the numbers to make sure that your current amount invested, plus planned future contributions, will get you to your goal number by your chosen retirement date. There are many calculators online, including at Investor.gov, that you can use to do this math.
By checking to ensure that you are saving enough, investing the right way, and staying on track with your Social Security benefits, you can set yourself up for the security that you deserve. With 2025 fast coming to an end, it's time to start working on these tasks now so you're ready for the new year.
