I ask clients a simple question all the time: When was the last time you actually sat down and looked at your financial plan? More often than not, the answer is some version of “I’m not really sure.” That’s understandable. Life gets busy, and a financial plan isn’t exactly the kind of thing that jumps up and down begging for your attention. But a plan you build once and never look at again isn’t really a plan; it’s a document collecting dust. This week, let’s talk about how often you should actually be reviewing yours.
Review your financial plan at least once a year. Think of your annual review the same way you think about a yearly physical. You may feel perfectly fine, but you still go, because that’s how you catch the small things before they turn into big things. Once a year, you should be looking at whether you’re still on track for retirement, whether your savings rate still makes sense, how your investments have performed, and whether your goals have changed. For most people, a once-a-year deep review is the right baseline. If nothing has changed in your life, then I can see extending it to every 2-3 years, but certainly not beyond that.
The calendar isn’t the only thing that should trigger a review. Big life events should too, such as getting married, getting divorced, having a child, changing jobs, receiving an inheritance, selling a business, losing a spouse, etc. These are all moments that can change your financial picture overnight. A plan built around your old life won’t fit your new one. I remember a client who came in for what he thought was a routine annual review, and almost in passing mentioned that he’d taken a new job with a completely different benefits package. That one detail changed his retirement contributions, his health coverage, and his tax picture all at once. Had he waited another 11 months to bring it up, he’d have left real money on the table. When something major happens, don’t wait for the annual review to roll around. That’s exactly the time to pick up the phone.
What about when the market fluctuates? This is where people tend to get themselves into trouble. When the market drops 500 points, the natural instinct is to log in, stare at the balance, and feel like you need to do something. In my opinion, checking your plan every time the market hiccups is one of the fastest ways to make a bad decision. A financial plan is built for years and decades, not for Tuesdays. By all means, a major market shift, a big move in interest rates, or a new tax law is worth a look. But the daily ups and downs? Those are noise, and reacting to noise usually costs you money.
Don’t confuse reviewing with tinkering. There’s an important difference between reviewing your plan and constantly rebuilding it. Reviewing means checking that everything still lines up with your goals. Tinkering means changing your allocation because of a headline you read this morning. The whole point of a good plan is that it gives you the discipline to stay the course when everyone around you is panicking. If you find yourself wanting to overhaul the plan every few weeks, the problem usually isn’t the plan; it’s the temptation to act.
So, what’s the right answer? For most people, the sweet spot is a thorough review once a year, plus an extra look any time a major life event or a real change in your circumstances comes along. That’s often enough to stay on track, but not so often that you talk yourself into decisions you’ll regret. And whenever you do sit down to review, make sure you’re doing it alongside your advisor, CPA, or attorney where the stakes call for it, so the changes you make actually fit the bigger picture.
Here’s the bottom line: The cost of reviewing your plan is an hour or two of your time each year. The cost of never reviewing it can be a retirement that quietly drifts off course for a decade before anyone notices. I’ve seen both, and I promise you the hour is cheaper. Put it on the calendar, treat it like the physical you don’t skip, and your future self will thank you.
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. To view form CRS, visit https://bit.ly/KF-Disclosures.
Eric is President and founder of Reich Asset Management, LLC. He relies on his 25 years of experience to help clients have an enjoyable retirement. He is a Certified Financial Planner™ and Certified Investment Management AnalystSM (CIMA®) and has earned his Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®) designations.
