3 Signs You’re Neglecting Your IRA

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Have an IRA? Read on to see why it’s important to keep tabs on it. 

If you have money socked away for retirement in an IRA account, that’s a very good thing. You’ll need personal savings to supplement your Social Security benefits as a senior, and funding an IRA is a great way to avoid financial worries later in life.

But your IRA also isn’t an account you should simply set and forget. So if these signs apply to you, it means you’re not giving your IRA the attention it very much deserves.

1. You never check your balance

Checking your IRA balance every day isn’t a good thing, just as it’s not wise or necessary to check your brokerage account balance on a daily basis. But it’s not a bad idea to check your IRA balance on a quarterly basis. And at the very least, you should check it on a yearly basis to get a sense of how much savings you’ve amassed.

Granted, it’s possible for your IRA balance to drop from one year to the next due to market conditions even if you’ve been funding your account. But it’s still important to have a handle on what your balance looks like. And if you’re not seeing the growth you’re hoping for in your IRA, it might serve as motivation to either boost your savings rate or otherwise look at changing your approach to investing.

2. You don’t know how your IRA is invested

The great thing about IRAs is that they allow you to invest your retirement savings in individual stocks, whereas with a 401(k) plan, you’re generally limited to a bunch of different funds only. But if you have no idea which stocks you own in your IRA, that’s not a good thing.

A stock you bought years ago may be consistently decreasing in value. That’s the sort of thing you’d want to know about — and change.

Also, it’s important to make sure your IRA is well balanced. That means you don’t want 65% of your IRA in tech stocks, or concentrated on any single market sector, for that matter. Rather, you should be aiming for a diverse mix of stocks.

3. You haven’t increased your savings rate since you first started funding your account

The amount of money you can contribute to an IRA on a yearly basis can change over time. In 2022, IRAs maxed out at $6,000 for workers under the age of 50 and $7,000 for workers 50 and older. This year, these limits are up by $500, so savers under age 50 can contribute up to $6,500 to their IRAs and those 50 and older can contribute up to $7,500.

If you started contributing to your IRA years ago but have yet to increase your savings rate, you may want to rethink that. Of course, some people have been unable to ramp up their retirement plan contributions over the past year due to inflation. But it’s generally a good idea to increase your savings rate as your earnings rise. So if you’re making more money now than you did when you first opened your IRA, it may be time to see what you can do to pump more money into your account.

Paying attention to your IRA could spell the difference between meeting your long-term savings goals and falling short. If these signs apply to you, carve out some time for a deep dive into your IRA so you can get a better handle on your retirement savings.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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