There are many things in your personal financial life that you initially set up and thought you were done with - only to find out later that you probably need to do some updating.

There are many things in your personal financial life that you initially set up and thought you were done with - only to find out later that you probably need to do some updating.


Think of your first day of work. They put a ton of paperwork in front of you, and you feel like a rock star with all the autographs you are asked to provide. You have decisions about how much to put into the 401(k) and who to make the beneficiary of your retirement account and group life insurance benefits. All of these are typically decisions that you make on that very confusing first day, and one of the most commonly overlooked areas beyond that day.


Regarding the amount of your contribution, approach this with the knowledge of how much you need to put away to have a desired amount of money in the plan when you retire. If you can't do that, consider contributing enough to take advantage of any employer matching program available.


The next part of the 401(k) decision is how to allocate the assets. Plan trustees are required to offer a blend of choices ranging from conservative through aggressive, and you get to choose your own allocation. But here again, this is often an allocation made on the day you opt into the plan and not checked again until the headlines are filled with frightening financial news.


We are not suggesting that you glare at your holdings every day, but looking at them now and again is a good idea. Understand what you own, why you own it, and what you'd do if you could put more money in the plan tomorrow. Get advice here if you are not comfortable answering these questions. 


Another 401(k) choice available to many people is whether their contribution is a traditional contribution that reduces their taxable income or a Roth 401(k) contribution that comes from after-tax dollars. The former gets you the deduction now but the withdrawals are taxable later. The Roth 401(k) contribution gives no tax deduction now, but the withdrawals are tax free upon reaching age 501/2. Which is right for you?  You should consider your tax bracket today vs. your tax bracket in retirement, and whether these contributions will provide the backbone of your retirement income plan or not ever be needed to fund retirement.


Beneficiary elections also need to be reviewed regularly. That will be the topic of our discussion for next week.


John P. Napolitano is the CEO of U.S. Wealth Management in Braintree, Mass. He may be reached at jnap@uswealthcompanies.com.