Risk, retirement and your portfolio

Ask NJMoneyHelp

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Q. My 401(k) has about $200,000 in it, and I had it all in stocks. I’m 45 and this is my only retirement money. Am I being too risky?
— Behind in saving

A. You’re smart to want to analyze your retirement account, no matter its size.

But your question isn’t easily answered without knowing more about your overall financial situation.

Your age and where your portfolio is invested is important, but there’s more to it than that.

When working with investors, a financial advisor would sit down and discuss with you your goals and concerns in relation to how you feel about risk and how much risk you are willing to take, said Bill Connington of Connington Wealth Management in Paramus.

“Based on where you are presently invested, you would be an aggressive investor willing to take lots of risk,” Connington said. “Saving for retirement is very important since these funds will be what we use, with Social Security or any pensions you may have, in providing your retirement income.”

He recommends you start by creating a retirement plan to see how much you will need at retirement to fund the lifestyle you wish to have.

This tell you if you’re saving enough, if you need to save more or if working longer will be required.

Then, Connington said he would have you complete a risk tolerance test to see how you really feel about the losses and gains you could see in your portfolio.

If you’re short, you may be tempted to take more risk to help your portfolio grow, but that may not sit well with your risk tolerance. An advisor could help you find the right balance.

An advisor would also look at how much you are putting into your 401(k) on a paycheck basis and what company match you receive from your employer.

You’d also need to discuss your other financial goals, Connington said.

This should be an ongoing process as you near retirement.

“It is really important to plan for your retirement and then review each year to make sure you are on track to reach your goals,” he said. “Remember, you get no do-overs in retirement.”

If you’d like to explore all these issues, consider a free money makeover with NJMoneyHelp.com.

Email your questions to moc.p1511336373leHye1511336373noMJN1511336373@ksA1511336373.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.