If you’ve changed jobs a few times, opened accounts over the years, or rolled things here and there, you’re not alone. Having your retirement savings scattered isn’t just messy. It can be detrimental.
We see this somewhat regularly, as people bring in statements from orphaned 401(k)s from their old employer, IRAs opened with multiple custodians, and brokerage accounts that are a hodgepodge of stock ideas and mutual funds that have not been given much thought since they were initially purchased. It’s normal, as people generally focus on their family and career. There was intention and action was taken to build toward the future, but it wasn’t done as part of a structured plan.
Here’s the problem: having scattered accounts makes it difficult to implement a cohesive strategy for your future, much less track your progress.
A Case Study Example
Take this fictional (but accurate) example. We’ll call him Jim, a 55-year-old, who is beginning to think seriously about his retirement. Over the years, Jim worked for four different companies and contributed to each company’s 401(k). Along the way, he also opened an online brokerage account and started a Roth IRA.
The Problem: Jim thought he was diversified, but each account was invested without coordination. The result was investments in abandoned accounts that he hadn’t reviewed in years, leading to an overly aggressive asset allocation and missed planning opportunities. Worse, Jim had no clear portfolio income strategy and was unaware of RMD (required minimum distribution) strategies for each of his retirement accounts. This could lead to inefficient withdrawal strategies that could potentially come back to haunt him from a tax perspective.
The Fix: Fortunately, Jim has options to organize his accounts and simplify his financial affairs. We could help him consolidate his accounts to a single custodian so that he could view all of his accounts and holdings under a single login. Where possible, we can help him to combine similar accounts to further streamline his portfolio and reduce complexity. We could help him create a coordinated income plan to help minimize taxes where possible and ensure appropriate RMD strategies are implemented. Each account and holding would be reviewed and addressed as part of his long-term planning goals and household portfolio strategy.
The Outcome: Jim’s portfolio would be more streamlined, he would have fewer accounts to monitor, and he would better understand how each one plays into his retirement plan. He could also potentially avoid unnecessary taxes. Instead of scattered investments and accounts, he has a cohesive and well designed retirement portfolio.
What We Do - Create Clarity
Consolidation helps for clarity, optimization, and strategy execution. It might mean rolling old 401(k)s into your current 401(k) plan or an IRA, optimizing your Roth strategy, or adjusting how, when, and from which account(s) you pull income in retirement.
This is about function as well as form. Each account plays a role, but not each account plays the same role in your retirement strategy. You should have a plan for what each one is doing for you.
Impacts of Change
- More clarity. You know what you have, where it is, and what its role is. (And did we mention - single login and single point of contact?)
- Smarter decisions. You can potentially be more proactive with taxes, create an income strategy, and make sure that your investments are aligned with your goals.
- Fewer surprises. Fewer estate planning blind spots. Tax efficient planning and investment strategy. Fewer hidden fees.
Most people don’t have a retirement income problem. They have a retirement organization problem, which can lead to a multitude of unintentional problems.
Consolidation means regaining control and increased clarity. If this sounds like you, let’s clean it up. You’ve saved the money. Now let’s make sure it works for you!