When your portfolio isn't properly diversified, it's more likely to be negatively impacted by market fluctuations. This could have an impact on your ability to retire when you want. If you're already retired, it could mean your accounts provide you with less income than you were expecting.
Are you missing out on rebalancing?
When did you last check all of your old accounts? You may be a different kind of investor now than when you set them up, with a different risk tolerance and different goals. Choices you made in the past may not be right for your goals today.
If you set up a retirement plan with an aggressive investment mix (lots more equities than bonds, for example), and you now are more risk averse, your investments likely don't reflect that.
Similarly, stock market gains in the last decade may mean that equity investments make up a higher percentage of your portfolio than you initially intended.
If you have a holistic view of your investments and a strategy that is aligned with your goals, you're more likely to achieve them. A trusted advisor or resource can help you with this.
Should I consolidate my retirement accounts?
Having assets spread among several accounts may not just impact your returns. Consider these other common challenges of having multiple retirement accounts:
- It's hard to track required minimum distributions (RMDs): The age at which required minimum distributions (RMDs) must begin is now 73, up from age 72. In 2033, the age to start taking RMDs increases to 75. If you are taking a RMD for the first time, you have until April 1 of the following year to do so. If you were 72 in 2022 or earlier, you need to continue to take your RMDs. In 2023, the SECURE 2.0 Act also reduced the penalty from 50% to 25% for not taking an RMD or failing to take enough out of your retirement account.
- You may face additional fees: Some accounts may begin charging you a management fee if you're no longer contributing to them or no longer employed at your old company. When you consolidate, you may have access to a lower fee structure due to having more assets in one place.
- Your loved ones could be affected at an emotional time: What would happen if something were to prevent you from being able to access your finances? Would your loved ones know where to look and how to take control of many different accounts? It's easy for something to be lost in the shuffle.
- You'll have more paperwork: When you want to review your monthly or quarterly performance, you have to deal with multiple statements. Also, when you need to do things like update your beneficiaries, you have to do it for every single account.
A trusted source can help figure out what's right for you
Help yourself and your loved ones by talking with a TIAA advisor. You may well learn that consolidating retirement accounts may save you time and money, improve your portfolio diversification and help you pursue your goals more confidently.
