I ask clients a simple question all the time. When was the last time you actually sat down and looked at your financial plan? More often than not, the answer is some version of "I'm not really sure." That's understandable. Life gets busy, and a financial plan isn't exactly the kind of thing that jumps up and down begging for your attention. But a plan you build once and never look at again isn't really a plan; it's a document collecting dust. This week, let's talk about how often you should actually be reviewing yours.
At least once a year. Think of your annual review the same way you think about a yearly physical. You may feel perfectly fine, but you still go, because that's how you catch the small things before they turn into big things. Once a year, you should be looking at whether you're still on track for retirement, whether your savings rate still makes sense, how your investments have performed, and whether your goals have changed. For most people, a once-a-year deep review is the right baseline. If nothing has changed in your life then I can see extending it to every 2-3 years, but certainly not beyond that.
The calendar isn't the only thing that should trigger a review. Big life events should too such as getting married, getting divorced, having a child, changing jobs, receiving an inheritance, selling a business, losing a spouse, etc. These are all moments that can change your financial picture overnight. A plan built around your old life won't fit your new one. I remember a client who came in for what he thought was a routine annual review, and almost in passing mentioned that he'd taken a new job with a completely different benefits package. That one detail changed his retirement contributions, his health coverage, and his tax picture all at once. Had he waited another eleven months to bring it up, he'd have left real money on the table. When something major happens, don't wait for the annual review to roll around. That's exactly the time to pick up the phone.
What about when the market fluctuates? This is where people tend to get themselves into trouble. When the market drops 500 points, the natural instinct is to log in, stare at the balance, and feel like you need to do something. In my opinion, checking your plan every time the market hiccups is one of the fastest ways to make a bad decision. A financial plan is built for years and decades, not for Tuesdays. By all means, a major market shift, a big move in interest rates, or a new tax law is worth a look. But the daily ups and downs? Those are noise, and reacting to noise usually costs you money.
Don't confuse reviewing with tinkering. There's an important difference between reviewing your plan and constantly rebuilding it. Reviewing means checking that everything still lines up with your goals. Tinkering means changing your allocation because of a headline you read this morning. The whole point of a good plan is that it gives you the discipline to stay the course when everyone around you is panicking. If you find yourself wanting to overhaul the plan every few weeks, the problem usually isn't the plan; it's the temptation to act.
So, what's the right answer? For most people, the sweet spot is a thorough review once a year, plus an extra look anytime a major life event or a real change in your circumstances comes along. That's often enough to stay on track, but not so often that you talk yourself into decisions you'll regret. And whenever you do sit down to review, make sure you're doing it alongside your advisor, CPA, or attorney where the stakes call for it, so the changes you make actually fit the bigger picture.
Here's the bottom line. The cost of reviewing your plan is an hour or two of your time each year. The cost of never reviewing it can be a retirement that quietly drifts off course for a decade before anyone notices. I've seen both, and I promise you the hour is cheaper. Put it on the calendar, treat it like the physical you don't skip, and your future self will thank you.
Frequently Asked Questions About Reviewing Financial Plans
1. How often should I review my financial plan?
For most people, reviewing your financial plan once a year is a good baseline. An annual review helps ensure your retirement goals, savings, investments, and overall financial strategy still align with your current situation. If nothing significant has changed, you may be able to extend reviews to every two to three years, but it's generally best not to wait longer.
2. What life events should prompt a financial plan review?
You shouldn't wait for your annual review if you experience a major life change. Events like getting married, having a child, changing jobs, receiving an inheritance, selling a business, retiring, or losing a loved one can all significantly impact your financial plan and may require adjustments.
3. What is the difference between reviewing and changing my financial plan?
Reviewing your plan means checking that your investments, savings, and goals still align with your current financial situation. Constantly changing your strategy based on headlines or market emotions can work against your long-term success. A thoughtful review helps keep you on track without making unnecessary changes.