Reviewing your 401(k) statements regularly is a vital step in staying on track for retirement. Financial experts recommend checking your investment mix at least once or twice a year to see if you need to rebalance.

What is Rebalancing?

Over time, market fluctuations change the original "recipe" of your portfolio. If stocks perform exceptionally well, they may grow to represent a larger percentage of your account than you intended, exposing you to higher risk. Rebalancing involves selling a portion of those "winners" and moving the proceeds into underweight areas, like bonds or international funds. This ensures that your risk level remains consistent with your long-term goals.

How to Rebalance:

• Sell and Buy: Manually move money from overperforming funds to underperforming ones. Because this is a 401(k), these trades are typically tax-free.
• Redirect Contributions: Instead of selling existing shares, you can leave them as-is and simply direct your future paychecks toward the underweight investments until your target mix is restored.
• Automation: Many employers offer "Automatic Rebalancing" features or managed plans for a small fee. Additionally, Target Date Funds (TDFs) are designed to rebalance themselves automatically as you get closer to retirement.