This article was last updated on December 1
With stock markets staging a strong recovery the average return on a tax advantaged retirement plan, like a 401(k) and IRA, was around 11% according to Morningstar. At this rate your money will double every 5 or so years thanks to compounding. But how did your retirement plan perform? And have you even checked? For a lot of people the answer is No idea and No. This financial malaise is dangerous and everyone should be checking their retirement plans performance at least once a year and more often the closer you get to retirement. The reason: If the funds in which you have placed your retirement savings are performing way below market averages, it may be time to move them elsewhere or readjust your portfolio balance.
How do I check my retirement account performance?
You normally get an end of year statement that describes how investments in your fund performed. But unless you paid attention you may have missed the performance number, which is not always so obvious amongst all the other information in these types of letters. Fortunately all major fund managers now provide a way to see the performance of your investments online. For example, from my Fidelity 401K website I can get my portfolio return by month, quarter or year (custom date period) in about 3 clicks and in under one minute. Here’s how.
Log on to the fund managers site and go to the savings and retirement section. Click on online statement (other sites may call this transaction history or performance, like Vanguard does) to get to the page that allows me to enter the date period I want to analyze my retirement portfolio returns over. I picked 2010 by entering the custom date range shown in the screen shot below.
For most retirement company websites, you should be able to follow the above steps to get your indicative investment return by fund or overall portfolio (the screen layouts and menus will differ). You can also check comparable 401K or IRA fund performances at Yahoo or Google Finance sites to see how your investments are performing against the averages. If returns are more than 2% to 3% lower, it may be time to look at some alternative investment options within your fund or a whole new fund manager. You can read more on retirement plans asset allocation in this article.