What is a Retirement Plan Self Audit?

Your plans for retirement might adjust over the course of your life, and you need a way to check in and make sure you’re on track with your personal goals. That is known as a retirement plan self-audit. 

Ideally, you’ll meet with your financial team of professionals at least once a year to review all of your financial strategies such as business succession planning, asset protection planning, and retirement strategy. However, it is also important to complete your own self-audit of your retirement plan to determine whether you need to make adjustments. This allows you to make changes as needed, particularly if you plan to retire earlier or later than expected. The key thing to think about as you audit your retirement strategy is how much can you safely withdraw from your investment portfolio when you retire and not run out of money? In general, traditional advice has been to withdraw no more than 4% of your starting balance each year that you’re in retirement.

This strategy is recommended because it can help your overall portfolio avoid market downturns by limiting how much they take out of the account. However, there are multiple different variables to consider when auditing your own strategy and current balance, including investment returns, inflation, legacy goals, longevity, healthcare expenses and tax rates. Sticking only with the 4% rule can be risky, particularly considering that you may need to come up with additional funds to pay for services such as long-term care. Many people entering retirement do so in relatively good health and do not anticipate the impact of a sudden illness or disability.