Retirment? It's that pile over there..

I can't tell you how many frustrating conversations I've had with people over the last few weeks about their retirement accounts. Now, I know I'm not Warren Buffet (believe me I wake up and check every morning) but I also know that where your retirement dollars go should be important to you. I have had friends, colleagues, and even new clients pull out stacks, rubber banded stacks, of un-opened envelopes. I couldn't help but be boggled. When someone asks me for my advice or to "take a look at something for them" my response is usually a giddy willingness to try to have a positive impact on their financial literacy and situation. It can be something that can seem a little scary and overwhelming sometimes - especially if you aren't a numbers kind of person. But what really, again, boggles me is when you aren't even opening the mail.

My first piece of advice right off the bat - OPEN EVERYTHING! We are well into the fall and the new year is rolling right up on us. For a lot of folks this is the time of year that your retirement, 401K, and 403b, let you make those penalty free re-allocations. You won't know where to go when, odds are, you have forgotten where you started. So, pull out the envelopes and start opening..or at least just open the last one to see whats going on in that statement. A lot has happened this year and for the most part financial markets are up between 6%-8%, broadly. If you have been dollar-cost averaging your way through the year that can make for some pretty good gains for you.

My next step would be to talk or think about your goals. What's going on in your life right now? What might be happening over the next year? Financial planning is all about resource utilization ( dropped a little econ prof vocab on you) - what I mean by that is making the best choices for you given the amount of dollars you are pulling in each year. If you are feeling more than comfortable and want to contribute more by all means kick it up a notch. If you are planning some big life changing event like a wedding, a new child, a new home, or even a first vacation, then staying the course might not be a bad play either. What ever your doing though be sure to at least take advantage of the full contribution match benefit if your employer offers it. You'd be foolish to leave money like that on the table. What you don't want to do is promise too much then have to pull back, it's not the worst thing in the world but it does add a little wear and tear on the ol'confidence and feelings of accomplishment. Make sure you have enough in emergency, bill paying, and living your life funds and then work on the retirement stuff after that.

Are you as risk averse today as you were a year ago? Have you learned a little more about how financial markets work? Maybe become a bit more savvy? If this is the case then the next thing you want to do is take a look at how you are allocated. In most retirement plans, be they annuities or funds, there are certain investment "buckets" you can drop your money in to. There are lots of rules of thumb out there - some may apply to your situation, some may not. I'd say if you are 30-40 years out of retirement you can probably afford to be more risky than you think you can in your allocation choice. The decisions are ultimately yours though. Make sure you are investing where you feel comfortable because you have to make sure you can sleep at night with those choices. If your having questions or need extra info find someone like me who cares about your whole situation - not just the amount of money you can invest like these guys. There's no trick or magic investment that can guarantee massive returns. It's just patience and riding out the ebbs and flows of financial markets with hopes of catching some capital appreciation and dividends at a pace and security level you are comfortable with. Now, that said though, one other adage that still applies is most certainly: the higher the risk, the higher the reward. I mean it's just a fact that there is greater compensation for those who are willing to bear the higher systematic risks of the markets.

That in a nut shell is how I would help someone tackle their retirement questions/concerns out of the shot gun. It's a little vague and ambiguous on purpose. All the choices you make have to be your own - you shouldn't have someone telling you what's best for you, they aren't YOU! We skipped a few steps and there's usually a lot of conversation, planning, and investigation but ultimately it's about your goals, your sensitivity to risk, and how you choose to allocate the scarcity that is a paycheck these days.

If you feel comfortable: In comments leave some thoughts on your retirement assets are divi-ed up! Are you more of a hard asset/real estate kind of person? Or are you a teacher in a public school system that only talks about this stuff when your rep decides he has enough time to reach out to you?