NEW YORK (MainStreet) — Investors need to be more proactive and reallocate their retirement portfolio to mirror the changes in their life.

A recent TIAA CREF survey found that 25% of workers have never made changes to how their money is invested and an additional 28% have not made changes to how their money is invested in more than one year.

This strategy changes drastically with younger investors.

Millennials were significantly more likely to have changed how their money was invested in the past year with 59% who did so compared to those 35 years or older with only 42% who participated. Of those age 55 or older, 34% say they have never made a change to the way their money is invested.

Investors who have adopted the “set it and forget it" approach to investing their 401(k) can find it to be a “recipe for disaster,” said ReKeithen Miller, a certified financial planner with Palisades Hudson Financial Group in Atlanta. Although investments in a 401(k) are meant for the long term, investors still need to monitor them at least annually.

By reallocate or rebalancing periodically to a target asset allocation, investors will benefit from selling high and buying low since they will be “selling their best performing investments and buying those who have not performed as well recently,” he said. This strategy helps investors limit the amount of risk and control it.

Since stocks tend to outperform bonds, if a portfolio is never rebalanced, stocks will eventually make up a larger portion of the portfolio, leading to higher volatility in the portfolio, Miller said.

“Revisiting the investments in your 401(k) will allow you to assess whether an investment option still makes sense,” he said. “Perhaps you picked a fund because it was managed by a very successful manager. If that manager is no longer around, the fund may not make sense for you to invest in going forward especially if the new manager plans to follow a strategy that you are not comfortable with.”

Investors who rarely make changes to their retirement portfolio are pursuing the right strategy because there is no need for individuals who are over 20 years from retirement to reallocate frequently, said Robert Johnson, professor of finance at Heider College of Business at Creighton University.

“If you are young and retirement is many years off, the optimal allocation for most individuals is either 100% stocks or the vast majority in stocks,” he said. “One’s asset allocation should not change significantly from year to year. The fact that the majority of individuals haven’t changed how their money is invested in the past year is actually quite encouraging.”

Although many Millennials are making more changes to their portfolio, some of them could be “chasing returns” or “running scared,” Johnson said.

“They increase their allocation to stocks after stocks have performed well and lower their allocations to stocks when they have recently fared badly," he said. "In essence, they are doing the opposite of the old adage ‘buy low and sell high.’”

Millennials need to build their portfolios instead by having a very large allocation to stocks and to leave that allocation untouched each year, he said.

“They have the benefit of having many years to go until retirement and can afford to assume the short-term volatility of the stock market,” Johnson added. “Unfortunately, many people get the idea that ‘investing’ is about actively buying and selling. Building wealth is about developing a plan and sticking to it, ignoring all of the ‘noise’ coming from many of the financial news networks.”

Without rebalancing a 401(k), a consumer may be invested like a 25-year-old when he is actually 65 and ready to retire, said Martin Buchanan, private wealth advisor for Buchanan Capital Management in Oklahoma City.

“If the economy were to go south and this individual was taking on the same amount of investment risk as when they were at 25 years old, they would not have the same luxury of time to recover their investments that their younger self would have,” he said. “All too often investors are emotional with their assets. In a market downturn, participants may sell out of their investments for fear they will fall lower and in turn miss the recovery.”

Investors need to review their investments “when they have the greatest need for liquidity” such as paying for college, said Terry Dunne, managing director at Millennium Trust in Oak Brook, Ill.

“The secret to making money over time is to invest money regularly and stay invested,” he said.

--Written by Ellen Chang for MainStreet