The Importance of Reviewing Your Retirement Plan Every Year
Retirement planning isn’t a “set it and forget it” exercise. It’s a living, breathing process that should adapt as your life, goals, and the markets change. Just as you would schedule a yearly physical to protect your health, an annual review of your retirement plan protects your financial future. Taking the time to reassess your plan once a year can help you stay on track and even uncover new opportunities to grow and protect your nest egg.
Why Annual Reviews Matter
Your retirement plan reflects your dreams, your lifestyle goals, and your resources. But those things don’t stay the same forever. By reviewing your plan at least once a year, you’re proactively making sure your roadmap still points toward the future you want.
Here’s how an annual review helps:
1. Adjust for Changes in Your Financial Situation
Life can bring promotions, job changes, downsizing, inheritances, new expenses, or the sale of property. Each of these can affect your retirement timeline. An annual review lets you realign your savings and investment strategy with your current circumstances.
Action Step: Each year, compare your income, savings, and expenses to your retirement goals. If you’ve had a major life event, update your contribution levels or adjust your asset allocation to stay on course.
2. Respond to Market Fluctuations
Markets move up and down, sometimes sharply. These shifts can impact your portfolio’s balance and your overall risk exposure. A yearly check-in ensures your investments remain diversified and suited to your comfort level and timeline.
Action Step: Rebalance your portfolio annually with your financial planner to maintain the right mix of growth and stability.
3. Reflect Evolving Retirement Goals
What retirement looked like for you five years ago may not match how you picture it today. Maybe you’re considering working part-time, spending more time travelling, or moving closer to family. Updating your plan annually allows you to accommodate these new goals.
Action Step: Revisit your retirement lifestyle vision each year and adjust your savings rate, investment approach, and timeline accordingly.
4. Stay Ahead of Tax Changes
Tax laws and government benefits can shift from year to year, creating opportunities to save money or optimize your withdrawals. Reviewing your plan annually helps you take advantage of new rules and avoid costly surprises.
Action Step: Work with your financial planner to ensure your RRSP, TFSA, and other retirement vehicles are used in the most tax-efficient way possible.
The Bottom Line
Reviewing your retirement plan annually is like giving your financial future a check-up. By proactively adjusting to changes in your finances, markets, goals, and tax laws, you can stay confident that your plan is aligned with your vision for retirement.
Take a moment this year to sit down with your financial planner, review your numbers, and ask yourself: “Does my plan still fit the life I want?” A small investment of time now can pay dividends in peace of mind later — and keep you on the path to the retirement you deserve.