Planning to make some New Year’s resolutions for 2017? You might think about making some regarding your retirement plans. If you’re like 64 percent of Americans, you’re concerned about not having enough money to support your retirement. A recent Gallup study found that retirement was Americans’ top financial concern for the 16th year in a row.1
It’s easy to fall behind on saving for retirement. Other things, such as child needs, health care and home repairs, may seem like more pressing challenges. It’s not hard to push retirement savings down the priority list.
But that doesn’t mean it’s too late to get back on track. Take the new year as an opportunity to reassess your goals and start taking the steps you need to make sure you can live the lifestyle you desire in retirement. Below are a few things you should think about doing in 2017:
Make a budget and stick to it.
A recent Gallup study found that two-thirds of Americans don’t use a budget.2 Given how helpful and useful a budget can be, it’s perhaps surprising that so few people use one. Without a budget, it’s impossible to have a good idea as to whether you’re meeting your savings goals. If you don’t know how your money comes in or where it goes, then you’ll struggle to maximize your savings.
When creating a budget, it’s important to factor in your essential and nonessential expenses. For instance, you need to eat, and you need a place to live. Expenditures like these are necessary and probably can’t be helped. But other expenses, like shopping and travel, may not be mandatory. It’s also important to factor in paying yourself. Putting money aside for your savings should always be considered a mandatory expense.
Having debt isn’t necessarily a bad thing. In some cases it can be helpful, letting you leverage your assets to further your financial goals. But just because you can borrow money doesn’t mean you should. Taking on too much debt can significantly reduce your ability to put money toward your savings.
You also might want to be careful with certain types of debt, like credit card debt. High-cost, nondeductible consumer debt can eat up cash flow, reducing your ability to save. If you have high-interest debt, make 2017 the year you finally develop a strategy to eliminate it.
Protect yourself from risk.
Even the best retirement plans can fall apart because of unforeseen events. Emergencies can crop up unexpectedly, and if you haven’t protected yourself from that risk, you could find yourself in serious trouble.
This year it might be a good idea to review your coverage needs and assess where you are most vulnerable to risk. Depending on your needs, you may want to consider insurance for things like property damage, early death, disability and long-term care.
You also might want to bolster your reserve fund that you use only for emergencies. Doing so can take you one step closer to being protected from life emergencies. The last thing you want is to draw from your retirement savings to cover emergencies that could otherwise be funded from an emergency reserve.
Searching for a retirement planning strategy to fit your goals? Let’s start a conversation. Give us a call at J. Harris Financial and discuss your goals with a financial planning professional today.
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