On a snowy January morning earlier this year, I woke up for a deep sleep of five years. No, I’m not Rip Van Winkle and I wasn’t off playing in the Catskill Mountains — I’m a recent retiree who didn’t keep track of all of her investments.
The character Rip Van Winkle was a staple of children’s literature in the 1950s, but for anyone who’s not familiar with Rip, he is the hero of an 1819 short story by Washington Irving. Rip, a none too industrious resident of the Hudson River Valley, wanders off from his village, has adventures and proceeds to fall asleep for 20 years. When he wakes up, the American Revolution had come and gone and George Washington’s portrait has replaced that of King George.
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Like Rip, I too fell asleep, but in 2008. When I woke up, an investment company was asking me to prove I was still among the living. Its office was close by and I had the benefit of visiting to prove I was alive. When I stopped in, I learned my Roth individual retirement account (IRA) had the same amount of money — more or less — as it did in 2008, meaning it hadn’t really grown. I had slept through recovery by keeping it in a cash fund, and then by not being prudent in tracking it.
I’m not proud of this episode — and I switched my IRA to something more robust immediately — but I also know that I’m not alone in this. I’ve kept good track of other investments, but this little one got away.
I was chatting about this with a friend who related a similar story. She had taken out a whole life insurance policy in order to provide for the grade-school daughter. The premium was small and she just kept paying it. But that was 20 years ago, and her 8-year-old daughter is now 28, and the policy is no longer needed. It will be nice to have the money to pay for her daughter’s wedding, but the money might have been better invested over the years.
My Rip Van Winkle adventure made me think about my affection for my former employer’s 401(k)’s plan. I’d retired in June and had given no thought to moving it, merging it with other accounts or doing anything else with it. My nap time here isn’t 20 years, but it made me realize how easy it is to simply keep the status quo, even when the status quo doesn’t do much for my finances.
January, and approaching tax time, is a great time to review everything financial. It’s a time to look at the savings bonds tucked in your desk drawer — most of us have them — or the little IRA you put in what once was the corner savings bank.
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Here are three tips to help with your review.
1. Review and adjust. It’s easy to tuck your tax papers into the 2013 file and forget about them after you’ve filed your taxes. Don’t. This is the time to review your holdings and accounts and see if there are changes you need to make.
2. Don’t forget your records that are electronic. Information for my Roth IRA comes to me via email. It’s easy to overlook it, as I did.
3. Think about a more formal organizer. Whether it’s Manilla to organize your documents and accounts, a spreadsheet or just a notebook, it might be what you need. And, of course, use it.
Rip and I fell asleep, but this is your alarm clock.
Carol Zwick is a freelance writer and blogger. After 25 years in government management, she officially signed her last time sheet and retired in May 2013. She now writes about and lives life beyond the office. She brings her experience in community relations and customer service management to her writing. A graduate of Mount Holyoke College, she has lived in New York City since 1975. Loving all that the city offers, Carol enjoys sharing her adventures on her blog, Buttercup Counts Her Blessings. Her passions are reading, museum visits and theater. She hopes to visit all 50 states — eight to go — and is always planning a faraway trip.
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