As the year comes to a close, now is the perfect time to review your 401(k) investment allocation. A little attention now can help maximize your retirement savings, minimize risks, and ensure your investments are aligned with your financial goals. At Lehigh Valley Top 401(k) Providers, we help clients make informed decisions that optimize their portfolios before the year ends.

Understand Your Current Investment Allocation

What Investment Allocation Means

Your investment allocation refers to how your 401(k) contributions are divided among different types of assets, such as stocks, bonds, and cash equivalents. The right allocation balances growth potential with risk tolerance.

Why It Matters

Market shifts can affect your portfolio over time. Without a review, your allocation might no longer match your goals, potentially exposing you to higher risk or lower returns.

Check for Portfolio Drift

What is Portfolio Drift?

Portfolio drift occurs when certain investments grow faster than others, altering your original allocation. For example, if stocks perform exceptionally well, they may make up a larger portion of your portfolio than intended.

How to Correct It

  • Rebalance your portfolio to bring it back to your desired allocation.

  • Adjust contributions going forward to maintain the right balance.

  • Consider consulting a 401(k) advisor for a personalized plan.

Maximize Your Tax Advantages

Contribution Limits for 2025

For 2025, the IRS allows a maximum employee contribution of $23,000 (or $30,500 if you’re 50 or older). Reviewing your allocation now ensures you’re making the most of these limits.

Tax Benefits of Rebalancing

Rebalancing strategically can help you defer taxes, manage capital gains, and potentially reduce your taxable income, depending on your plan type.

Align Investments With Your Risk Tolerance

Why Risk Tolerance Changes

Your financial situation, goals, and even market conditions can change over time. What felt comfortable last year may be too aggressive or too conservative today.

How to Adjust

  • Reassess your risk tolerance annually.

  • Consider age-appropriate strategies, such as shifting to more conservative investments as retirement approaches.

  • Diversify to protect your portfolio against market volatility.

How Lehigh Valley Top 401(k) Providers Can Help

Reviewing your 401(k) before year-end doesn’t have to be overwhelming. At Lehigh Valley Top 401(k) Providers, we:

  • Analyze your current investment allocation

  • Recommend adjustments to optimize returns and manage risk

  • Help maximize your year-end contributions and tax benefits

Schedule a consultation today to ensure your 401(k) is on track for a strong finish to the year.