I want to retire before 50, so I asked a financial planner for 3 ways to earn more on my savings

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• I want to retire before 50, but my savings don't seem to be growing fast enough.
• A financial planner told me I need to understand how my retirement account is invested.
• He also said I can increase my risk levels and consider other types of accounts.

Even though I'm 35, I want to retire early and be able to stop working before I turn 50. Yet planning for retirement always falls at the bottom of my to-do list and I have a lot of financial mistakes to clean up before I find myself closer to that goal.

Right now, I have an inactive 401(k) that I haven't contributed to since I got laid off from that full-time job in 2015. I also have a SEP IRA that I contribute to monthly, but it's passively managed and I have no idea what funds are in it or how the money is being invested.

I met with certified financial planner Taylor Kovar to find out what I can do to put this money on a better path for growth in the next few years.

1. Understand what's in your retirement account

While some people I know actively manage their retirement plans and move money between different funds on a regular basis, I don't touch my accounts and let them be passively managed by the brokerage. I don't feel like I have the knowledge or time to be able to manage my retirement accounts on my own. However, Kovar said it's still important to keep a pulse on what's happening inside of those retirement accounts.

"It's important to know what your money is doing," he said. "Maybe your employer has changed up some of the options or your funds are taking a low-risk path and not providing you with growth. Either way, it's important to know so you're not missing out on opportunities to enhance your wealth and have better returns."

He suggested auditing my retirement account to make sure my investments aren't carrying high fees, using a free portfolio analyzer to spot hidden fees, staying informed and educated, or chatting with a financial advisor.

Kovar noticed that my money was allocated well between diversified funds (ex: international exposure, emerging markets) but there could be room for improvement when it comes to changing risk exposure, adding more of a mix of ETFs, mutual funds, and other types of investments.

"Before rushing to make any changes, take a deep breath and understand why you are making the change. What goal are you working toward and why do you feel you need to make a change?" he said. "Plus, remember, just because a certain investment worked for someone else does not mean that it will automatically work for you!"

2. Check on your risk levels once or twice a year

Kovar said the mix of investments that often make up a retirement account can range based on what level of risk you're the most comfortable with. People looking for more risk, for instance, might want to have fewer bonds in their account and more stocks. Those who are inching closer to retirement and are more risk-averse might want to have more bonds in their account.

Because I mentioned that I wanted to increase my risk and retire early, he recommended dropping bond funds entirely and utilizing additional ETFs in market segments I like, such as energy, technology, healthcare, and real estate.

"Not only will this help diversify you more, it will also help to keep you engaged in what you are invested in since you have an emotional attachment to that segment," he said.

Kovar recommended that people look at their retirement accounts every 6-12 months to determine how much risk they want to take on.

"People might adjust their risk levels based on the economy, world news, or even what season of life they are experiencing, like marriage, kids, moving, or changing jobs," he said. "Those types of things can determine a person's aversion to risk and can help them edit their retirement account to reflect that."

3. Consider changing the type of retirement account you use

After many years of keeping cash in an inactive 401(k), I'm looking to move that money into a different retirement account, like a Roth IRA or my SEP IRA.

Kovar said people who have retirement accounts that are inactive or who want to invest the money in their retirement account into more diverse offerings might consider picking a new type of retirement account.

"Some 401(k) plans are limited in terms of what types of things you can invest the money in," he said. "However if you wanted to invest your retirement funds in real estate, private business, or other types of things, you might consider opening up an IRA."

Kovar recommended those with a 401(k) consider having a second retirement fund as well, so their investment options aren't limited.

"If you have a 401(k), contribute money to it, but only if your employer matches," he said. "Then you can set up an IRA or a taxable brokerage account and put more money in as a way of diversifying your retirement accounts and investment options."

This article was originally published in October 2023.