I’m a Financial Advisor: Here’s How Often You Should Check Your Retirement Account Balance

checking her home finances online.
sturti / Getty Images

The best investor is one who’s informed, but obsessing over your retirement fund’s performance can stress you out and trigger the kind of emotional and counterproductive decision-making that can thwart even the best-laid plans.

While most experts don’t recommend setting and forgetting your 401(k), it is possible to over-engage. Let’s take a deeper dive into how often you should check your retirement savings accounts.

Fixating on Returns Is Bad for You and Your Retirement Goals

On Dec. 5, 2022, Nationwide released the results of its eighth annual Advisory Authority Survey. It showed that nearly half of all investors were compulsively checking their 401(k) balances more than three times a week. It was a fear-based reaction to an ongoing bear market that was shrinking their retirement funds as the always-expensive holidays approached.

In the study’s synopsis, the company’s president wrote, “It may be best to take a break from obsessively checking retirement balances. This can create self-induced anxiety which can lead to short-sighted, emotional decisions. It’s a habit that is unlikely to serve a constructive purpose at a time when we’d all like to be focused on recharging our batteries and being with the people we care about. If you want to take proactive steps, have a conversation with your advisor or financial professional and establish a long-term plan — or revisit the plan you already have in place to ensure it remains aligned with your goals in the current environment.”

Are You Retirement Ready?

Up or Down, Obsessing Leads to Bad Results

The danger of hyper-focusing when your holdings are down is that the helpless feeling of watching your nest egg shrink might compel you to react to short-term market fluctuations without regard to your long-term plans by panic-selling or other destructive behavior.

“It is important to stay informed about your investments and know what is happening, but by checking too often, you may be tempted to make changes to your plan that can be a big mistake,” said Kendall Meade, a certified financial planner at SoFi.

But compulsive balance-checking can be dangerous during bull markets, too. A Wall Street Journal YouTube video explained that the rush of watching your 401(k) grow when stocks are up can breed false confidence, which can lead to overspending or the temptation to over-allocate in stocks.

Either way, the outcome of obsessing is rarely beneficial to the investor. A Journal financial reporter stated, “There’s pretty longstanding behavioral research that shows that the more often you look at your 401(k), the more often you look at the balance, the lower your long-term returns are likely to be.”

How Often Is Too Often?

When it comes to checking in with your retirement fund, there is no ideal frequency that’s right for every investor, but every morning with your daily coffee — or even worse, several times throughout the day — is overkill.

For Many, Four Times per Year Will Do It

One winning formula is to visit your stock holdings as frequently as the companies that issue them release their earnings reports.

Are You Retirement Ready?

“The right cadence for reviewing your accounts varies from person to person,” said Meade. “I recommend checking in on your accounts at least once a quarter, but checking in daily can cause extra anxiety for many people. Regardless of how often you check in, resist the urge to make radical changes to your investments due to current conditions. While a downturn in the economy or a plunge in the stock market can be scary, it is important to make sure that we don’t let short-term market fluctuation impact our long-term investing goals like retirement. The best thing to do regardless of current market conditions is to make a plan, get invested in an appropriate allocation that you are comfortable with and stay invested over the long term.”

There’s a Solid Argument for Annual Check-Ins, Too

Some experts say twice a year is the sweet spot, but others think it’s sufficient to revisit your portfolio just once per trip around the sun to see where you stand, make sure there are no surprises with fees and ensure your assets remain balanced according to your plan.

“In my experience, the sweet spot for checking investment balances is about once a year,” said James Allen, certified financial education instructor, financial advisor, certified public accountant and founder of Billpin.com. “This frequency allows you to stay informed about your financial progress without falling prey to the emotional rollercoaster that can come with more frequent check-ins.”

Are You Retirement Ready?

Allen tells his clients to think of growing a nest egg like tending a garden. “You plant your seeds — in this case, your investments — and you need to give them time to grow,” he said. “You wouldn’t dig up your seeds every week to see if they’ve sprouted, would you? The same principle applies to your investments.”

Allen also says that yearly check-ins provide an opportunity to rebalance your portfolio, if necessary.

“Market fluctuations can cause your asset allocation to drift from your original plan, and rebalancing helps you stay aligned with your risk tolerance and investment goals. Remember, investing is a marathon, not a sprint. It’s about long-term growth, not short-term gains. So, let your investments grow and resist the urge to peek too often.” 

More From GOBankingRates


See Today's Best
Banking Offers