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4 Questions to Evaluate Your Retirement Savings Performance

Maybe you’re the kind of person who likes to ponder life’s biggest questions. Questions like, What’s the meaning of life? Are we alone in the universe? Where do all of my missing socks go?

But here’s a question that’ll really keep you up at night: Am I on track to retire comfortably someday? One way to find out is to evaluate how your investments and retirement accounts are performing . . . which means asking even more questions!  

While we can’t help you find your missing socks, we can help you figure out how your retirement accounts are doing with these four simple questions.

Question 1: As a group, are my mutual funds outperforming the stock market ?

Have you ever heard of the term “par for the course”? It’s a golf term that basically means you’re getting average results. So what’s par for the course when it comes to investing?

If you look at the S&P 500 Index—which measures the performance of the 500 largest, most stable companies on the New York Stock Exchange—you can see how the stock market as a whole is doing. That’s your baseline average. Your goal is to beat that average. That’s how you know if you’re doing well or not.

And if your mutual funds as a whole are doing worse than the S&P 500, you’re stuck in a sand trap. (For all you non-golfers out there, that’s a bad thing).

Right now, the question isn’t whether each individual fund is keeping up with the market. As a group, your investments should keep up with or outperform the stock market over time. Your goal should be to invest in mutual funds that consistently outperform the stock market. And, clearly, if your mutual funds are not keeping up, you need to start digging to find out why.

Question 2: Is my mix of funds off-balance?

If your mutual funds are underperforming, it could be because your fund mix is out of whack. A balanced mix of funds plays a much more important role in the success of your retirement accounts than most investors realize. Our favorite combination is investing 15% of your income split evenly between four types of mutual funds:

  • Growth funds
  • Aggressive growth
  • Growth and income
  • International

Let’s say—instead of spreading your investments evenly—you invested half of your retirement savings budget into aggressive growth funds. These funds are the “wild child” of your portfolio, which means they can be a little unpredictable. When they’re up, they’re really up. . . but when they’re down, they’re really down. If you lean on those funds too much, a downturn in the stock market could drag down your returns. Not good!

Remember, each of the four fund types performs differently in different market conditions. By keeping your mix of funds equal, you can take advantage of all types of market conditions. If your aggressive funds dip, your boring—but reliable—growth and income funds (and your other funds) can still protect your retirement savings from the ups and downs of stock market investing. Just like most things in life, balance is key.

Are your funds uneven or off-balance? Don't worry—rebalancing your funds is an easy fix. Your investment professional can help you maintain the right balance in your retirement portfolio so you’re properly diversified. Easy peasy!

Question 3: Do I have top-performing funds in my retirement accounts?

Now that you’ve examined your mutual funds as a whole, it’s time to grab a magnifying glass and take a closer look at your individual funds. Remember, not all mutual funds are created equal, which is why choosing the right mutual funds is very important. As you review your funds, keep these things in mind:

  • Short-term top performer is not the same as long-term average performer. Depending on how the market is behaving, short-term returns can either look impressive or scary. Don’t get so caught up in what’s happening right now. You’re playing the long game, remember? Stay informed about your funds’ recent performance, but stay focused on their long-term returns.
  • Top performer means different things to different funds. Remember, the four types of mutual funds perform differently in their own market. That’s the point! Even in a growing market, your growth and income funds usually aren’t going to perform as well as aggressive funds. They aren’t supposed to. So the best thing to do is to compare your aggressive funds against other aggressive funds. The same goes for your growth, growth and income, and international funds. This way, you’re comparing apples to apples—not apples to some other fruit.

You can use free online mutual fund screeners to compare your funds. But if you’d like a more personal touch, it’s best to talk to an investment pro who knows and understands your investment goals.

Question 4: Do I need to make any changes to my individual funds to improve performance?

Have you ever been stuck in traffic, got impatient and switched lanes . . . only to come to a grinding halt while the lane you were just in starts to move faster than the one you changed to? That’s what usually happens when you keep switching funds trying to chase higher returns! 


How much will you need for retirement? Find out with this free tool!

Look, you’re not trying to time the market here. As a long-term investor, changing funds should be extremely rare. In fact, investors who hold their mutual funds for more than five years should expect them to outperform the stock market over the long haul—which is what you’re aiming for.1

Jumping from one fund to another to chase high returns will have the opposite effect on your retirement accounts. There is no reliable way to time the market, so choose good growth stock mutual funds to start with, and trust their long-term performance to grow your nest egg.

Okay, so when should you change mutual funds? Well, there are some situations where you might consider making a change: You don’t want a fund that’s trying to game the market. Like we said, that’s not your goal. And if there’s a change in your mutual fund’s leadership that makes you uncomfortable, you might have to give it up.

It’s a tough decision, but you don’t have to make it alone. Your investment professional can help you make the tough decision to make that change.

Ready to Work With an Investment Professional?

When your car’s engine starts sputtering, are you going to ignore the problem and hope it magically gets better? Of course not! If you're not experienced with making repairs like that, you'd take your car to a mechanic you trust—someone who can figure out what the problem is and help you fix it. 

And the same is true with your investments. When you get an investment professional in your corner, they can help you evaluate your retirement savings performance and make suggestions to help you reach your financial goals. 

Don’t have a pro? The SmartVestor program is an easy way to find investment pros in your area who can help you navigate all your investing options with confidence. 

Find your SmartVestor Pro today!

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This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

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About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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