Do you have any resolutions for the New Year? It’s not too late to make some! While many people make resolutions to get in shape or pursue a new hobby, you may want to make 2018 the year you take control of your retirement planning. Whether you’re quickly approaching retirement or still many years away, it’s always a good time to reassess your planning and make adjustments.
Below are three action steps that can have a big impact on your planning and your financial future. Sticking to just one of these resolutions could strengthen your financial stability and help you have a more comfortable and enjoyable retirement.
If you’re looking for a resolution for the New Year, consider these planning items. Your future retired-self will thank you.
Protect yourself from risk.
Even the strongest retirement plans can be undone by a costly emergency. Medical bills, disability, job loss and even divorce can all wreak havoc on your ability to save. That’s why it’s so important to take steps to protect yourself from financial catastrophe.
Insurance is often an effective tool for minimizing financial risk. Examine your coverage for things like death, disability and even long-term care to determine whether you’re adequately protected. Also, if your emergency reserve is insufficient, take steps to build it. Set a regular contribution aside to build an emergency fund you can use when the unexpected happens.
Increase your contribution rate.
Does your employer offer a 401(k) plan? If so, when’s the last time you adjusted your contribution rate? Many workers set their contribution rate when they start a new job. They may set it at the level that maximizes an employer match, or they may pick the rate they think they can afford. Then they forget to change the rate in the future.
Consider gradually increasing your contributions this year. You can start small by simply increasing the rate 1 percent. Since the contribution is made automatically from your paycheck, you may not even notice the change to your cash flow. Set a goal to make further increases in the future. Those increased contributions can compound over time, perhaps giving you substantially greater assets when you retire.
Set an accurate savings goal.
Do you know how much money you’ll need in savings for retirement? If not, how can you know whether you’re saving the right amount every year? Far too many people save for retirement without setting a savings goal. That makes it difficult to gauge your progress.
One way to set a precise and accurate target is to build a detailed retirement budget. You may not know exactly how much you will spend on certain items in retirement, but you can likely estimate those costs.
Project your expenses to the best of your ability, and also estimate income from sources like Social Security and pensions. If those income sources don’t cover all your expenses, you’ll likely need income from savings to cover the gap. You can then calculate how much savings you’ll need to generate the required income. A financial professional can help you with this process.
Ready to achieve your retirement resolutions? Let’s talk about it. Tommy Mai Financial can help you analyze your needs and develop a strategy. Let’s connect today and start the conversation.
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