If you’re worried about having enough to retire comfortably, you may be giving more thought than ever before to how you manage your money. But if you're like many people headed toward retirement, you probably have retirement accounts at several institutions. Many people work for multiple organizations over their career, and end up with IRAs, 401(k)s or 403(b)s in two, three, four or even more places. This can add to the stress of planning for retirement — one way to cut down on that stress may be to consolidate some or all of these accounts.
There are a couple of good reasons to consolidate during these crucial preretirement years.
Having multiple retirement accounts means more statements to look at, more fees to keep track of and more accounts to adjust as things change, whether in the external environment or in your own comfort level with risk.
Consolidating makes it easier for you to invest your money in a way that can help meet your goals. Working with an advisor to find the right asset allocation for you, and rebalancing your account every year (or even more frequently), becomes more complicated than necessary if you have funds in multiple places. Getting the right asset allocation for you is only possible if you rebalance — that is, do the buying and selling necessary to keep the allocation where you and your advisor have decided it should be.1
Many people are content to leave things the way they are or just don’t have the time. Other people are hesitant to have all their money in one place or like their investments where they are today. Still other investors are concerned that exiting their current positions might require them to pay commissions, back-end fees or penalties.
These are all valid concerns, and deserve to be addressed.
If you decide that you want to consolidate your accounts, you can narrow down your prospect list of financial service firms using two criteria.
Everyone has different preferences for how they get financial advice, and may even prefer different ways depending on the service they’re seeking. You should go with a company that can offer high-quality advice in a variety of ways: face to face, online and on the phone.
Your retirement account isn't just a savings vehicle; it's also a bridge to consistent investment performance and professional advice, and part of your income in retirement. You should look for a firm with a range of investment options that can turn your investments into a guaranteed lifetime income stream — perhaps in the form of annuities.2 You should also look for places that offer you the option of advice and guidance, including asset allocation and rebalancing as needed. That way, you can concentrate on maximizing your income in what are, after all, prime earnings years, and leave the complicated math of investing to the professionals.
1 Please keep in mind that rebalancing does not protect against losses or guarantee that you will meet your goals.
2 All guarantees are subject to the claims-paying ability of the issuing insurance company.
Before consolidating assets, be sure to carefully consider the benefits of both the existing and new product. There will likely be differences in features, costs, surrender charges, services, company strength and other important aspects. There may also be tax consequences or other penalties associated with the transfer of assets. Indirect transfers may be subject to taxation and penalties. Consult with your own advisors regarding your particular situation.
Please keep in mind that there are risks associated with investing in securities including loss of principal.
TIAA-CREF Individual & Institutional Services, LLC, and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products.
Investment, insurance and annuity products are not FDIC insured, are not bank guaranteed, are not deposits, are not insured by any federal government agency, are not a condition to any banking service or activity, and may lose value.
You should consider the investment objectives, risks, charges and expenses carefully before investing. Please call 877 518-9161 or log on to tiaa-cref.org for underlying product and fund prospectuses that contain this and other information. Please read the prospectuses carefully before investing.
There are benefits to an IRA rollover.