Make Saving More Money for Retirement Your #1 New Year’s Resolution
It’s that time of year when we all make New Year’s resolutions, such as eating better, working out more, and getting into better shape.
But what about your financial future? What kind of shape is your portfolio in? How much are you currently saving for your retirement? You may want to consider saving more money for retirement as your number-one resolution for 2017.
Since many New Year’s resolutions tend to be broken by January 2nd, here are some simple suggestions to keep you on track and to avoid that happening to your retirement savings resolution.
1. Be sure you’re enrolled in your workplace’s 401(k) plan.
If your employer offers a 401(k) benefit plan, you should contribute as much as you can possibly afford in order to take advantage of all matching benefits. That’s as close to free money as you can get. You should also consider funding a Roth 401(k), if available, as tax-free sources of retirement income may become increasingly important.
2. Start saving early.
If you don’t have an employer who offers a benefit plan, open your own IRA or Roth IRA as soon as you can. Even small amounts put away earlier in life can have significant benefits. The earlier you start saving the better—not only to help grow your accounts, but also to help make saving for retirement a priority.
3. Create a realistic plan.
Too many people either don’t know or don’t take the time to research how much money they will need at retirement until it’s too late. Assess your needs realistically. Think about how you would like to spend your retirement years and then sketch out your expected costs for that lifestyle — and then double them. After you double them, you’re probably in the ballpark of your actual needs, because people rarely ever plan for the unexpected such as medical costs, nursing home fees, and long-term care expenses. For example, a 65-year-old, healthy couple can expect to spend $266,600* over the course of their retirement on Medicare premiums alone, according to HealthView Services.
4. Take a long-term view.
It’s important to remember to keep a diverse portfolio that balances your needs, as you grow older — you may want to consider a higher ratio of stocks and riskier investments in your youth, but then slowly shifting to more conservative investments as you near retirement. Buying hot stocks, trying to time the market, panicking after losses and dropping out of the market entirely, concentrating your investments with no diversification… these can all work against your retirement goals.
One example of a conservative retirement product is a fixed indexed annuity. An annuity serves as a complement to other retirement income sources, such as Social Security and pension plans. Fixed indexed annuities can offer principal protection with stable retirement income. The biggest advantages annuities offer is that they allow you to sock away a larger amount of cash and defer paying taxes.
The problem with New Year’s resolutions is that they’re so hard to keep. That’s especially true for resolutions associated with saving money and finances. But if you can find a way to keep this as your number-one resolution, you’ll not only improve your financial situation, you’ll be more optimistic about your retirement and your future.
Be sure to make retirement planning a priority for 2017 by contacting your financial advisor and setting up a meeting to discuss your options and the best financial tools for your portfolio.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.
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