Time for a 401(k) Gut Check: Rebalance, Reassess, and Protect Your Retirement Gains

Most holdings in your 401(k) are winners. Time for a gut check: rebalance, reassess risk tolerance, diversify and protect your retirement gains today.

If almost everything in your 401(k) is coming up a winner, congratulations — but don’t get complacent. Strong market performance can mask imbalances in your portfolio, change your exposure to risk, and create a false sense of security. Now is the time for a disciplined 401(k) gut check to protect gains and keep your retirement savings on track.

Start with a quick portfolio review. Look at your asset allocation: have equities grown to a larger share than you planned? If a bull market has pushed stocks well past your target allocation, your portfolio may carry more risk than you intended. Rebalancing — selling some winners and buying underweighted assets like bonds or international funds — restores your intended risk profile and forces disciplined profit-taking.

Reassess your risk tolerance and timeline. Market gains can change how comfortable you feel with volatility. If you’re closer to retirement, shifting toward more conservative, income-focused investments can preserve capital. Younger investors might use strong performance to increase contributions or maintain a growth orientation, but they should still confirm that their exposure aligns with long-term goals.

Review fund overlaps and fees. Many 401(k) plans offer multiple funds with similar holdings. Consolidating into a core set of low-cost index or target-date funds can improve diversification and reduce fees that erode returns. Pay attention to expense ratios, fund turnover, and any actively managed options that haven’t outperformed benchmarks.

Don’t forget tax-advantaged moves and contribution strategy. Maximize employer match first — it’s free money. Consider increasing contributions if your budget allows; reinvesting gains while contributing regularly benefits from dollar-cost averaging. Also evaluate Roth versus traditional contributions based on expected tax brackets in retirement.

Look beyond the 401(k). If your 401(k) is performing well, check other accounts for diversification, including IRAs, taxable brokerage accounts, and emergency savings. A holistic view helps ensure you’re not overconcentrated in employer stock or a single sector.

A 401(k) full of winners is a great problem to have — but it still requires attention. Regular gut checks, rebalancing, and strategic adjustments will help lock in gains and keep your retirement plan resilient through changing markets.

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