Readers, as the end of 2016 approaches, now is the time to start thinking about how you’ll make 2017 fulfilling and fruitful for you and your loved ones. For hundreds upon hundreds of years, people have celebrated the start of their new year by making promises to change their behavior or improve themselves. And it’s no wonder why: While New Year’s resolutions can be hard to keep, they may also make you more than 10 times more likely to achieve your goals than if you hadn’t made a resolution at all.
On the other hand, there is a reason why health clubs are super crowded in January and you can choose whatever machine you want, when you want it – by early February.
The turning of the calendar always ushers in a chance for meaningful change and that sentiment seems more pertinent this year. Tons of uncertainty here domestically and abroad. Simply, we must take care of our financial affairs. If you are near retirement take a good, HONEST look at what you’ll need to live comfortably. If your heavily invested in the market, pay some attention to what measures you have in place to mitigate your downside risk. The bull market isn’t going to last forever!
So, no matter what you hope to accomplish next year and beyond, here are 17 financial resolutions to help make 2017 healthy, happy, and successful:
(NOTE: I’m giving you 17 thoughts to consider. I’m a dreamer, but also a realist. Choose at least 3 and go to town on those three. Concentrate. Let some momentum motivate you to move forward. You’ll be happy you did!)
1) Create emergency savings
Life is full of unexpected emergencies, and having extra cash on hand can help keep a serious illness, home repair, or other sudden financial need from derailing your finances. Prepare for unpredictable expenses by putting aside six to eight months of expenses in an easily accessible cash-equivalent account.
2) Make a monthly budget and stick to it
Budgets may sound like a lot of unnecessary work, especially if you’re financially comfortable. But if you’re not tracking your spending, you may be surprised by how quickly it adds up — and which expenses are costing you the most. As 2017 begins, set a budget and work on sticking to it for three months. Track your performance and revise the budget, as needed. Don’t aim for perfection; instead, try for incremental improvement.
3) Save more for the future
Per the Insured Retirement Institute, 67% of retirees wish they has started to save earlier. Do you fear you’ll be in that boat? To avoid that fate, create a disciplined savings strategy because it’s a meaningful way to stay on track for your retirement and other goals. We recommend keeping separate “buckets” of savings for short-, medium-, and long-term goals, and leveraging tax-advantaged accounts where possible. Let us know if you’d like help saving for specific goals so that we can help ensure you have the right strategy for your needs and timeline.
4) Make retirement plan contributions regularly (instead of all at once)
Even if you’re diligently saving, you may be among the 71% of Americans who haven’t put aside enough money for retirement. One key change you can make is to take advantage of time in the market. Instead of waiting until the last minute to make your annual contributions, give your money more time to grow by making automatic contributions to your accounts every month.
5) Maximize your retirement-plan contributions
Tax-managed retirement accounts are one of the most powerful ways to save for a more comfortable retirement, because they allow you to control your tax liabilities today — while accumulating assets for the future. Make the most of these accounts by contributing as much as you can each tax year. We usually recommend putting in a much as you need to get your employer’s matching contribution. Other than that, we think any excess savings opportunities should be allocated to Roth accounts or specially designed permanent life insurance plans. We feel taxes will rise in the future (apparently, after they go down a bit?), and paying taxes on tax deferred money today (at low rates) is a good idea.
6) Pay down high-interest debt
Did you know that 54% of Americans believe they will never pay off their debts? Don’t let high-interest debt keep you from getting ahead financially. If you’re carrying a significant amount of debt, make paying it down a top priority this year.
7) Set goals for the future and work with a professional to help you achieve them
From our experience, people who set goals for themselves and create strategies to pursue them are much more likely to see success. From the same study by the Insured Retirement Institute (#3 above), 9 out of 10 boomers who work with a financial advisor of some sort HAVE retirement savings. Of those who don’t, 42% HAVE NO SAVINGS. An advisor can keep you moving in the right direction.
8) Create a powerful legacy for the world
We believe that a rich life involves more than financial success and a comfortable lifestyle. Whether you want to leave something to your loved ones or support causes you care about, take time to address the legacy you’d like to leave. On the same subject, many people as they near retirement are looking to retire “away” from something. Spend some time considering what you will ultimately be retiring “to.”
9) Review your estate planning and legal documents
Your core legal documents need regular reviews to ensure they keep up with any changes in your life. If a few years have passed since you looked at your documents, dust them off and make sure that they still represent your wishes. And if you seek more guidance on your estate plan, will, or other legal needs, we can connect you to thorough resources and helpful advice.
10) Review the beneficiaries of your financial accounts and insurance policies
As life changes, you need to periodically review and update your account beneficiaries. Since beneficiary provisions are independent of your will or other estate provisions, keeping them current is critical.
11) Stay on top of your health
Healthcare is a major expense for most Americans, especially if serious illness strikes. Take steps to protect your wellbeing by building a healthy lifestyle and prioritizing preventive care. (See my comment above joining a health club this January!) To further this point, consider some information from the 2016 Retirement Health Care Costs Data Report: For a 66-year-old couple retiring today, on average 57% of their social security payments will go to cover health care costs. This is no small amount. Moreover, inflation on health care costs rises very quickly (4% in November per the U.S. Department of Labor) and is not something with which you should mess!)
12) Protect your credit and identity
Identity theft and financial fraud are serious threats that can compromise your financial wellbeing. Protect yourself by reviewing financial statements and bills carefully for unauthorized activity. Regularly update your passwords for all financial accounts and always shred any sensitive documents before you dispose of them. Check your credit report for free each year at www.annualcreditreport.com. (I can’t remember where, but I recently heard a security expert suggest using a different username and password for each of your online accounts. I’ll let you decide if that’s too drastic but under the auspices of full disclosure, I did think about it.)
13) Review your tax strategies for potential savings
Every dollar you save in taxes is one that you can reinvest in your current lifestyle or future goals. But, recent tax-law updates mean that your tax burden may have changed — or even increased. In 2017, it will be an excellent idea to closely follow the proposed and enacted tax law changes of the new administration. For your reading pleasure, I will be providing regular updates..
14) Involve your children and grandchildren in your finances
Fostering financial wisdom is a powerful way to help your children and grandchildren build a solid, stable life — and help ensure you’re able to pass on your values and wealth in the future. Rather than keeping your finances private from your loved ones, we recommend including them in conversations about your goals and priorities. We also invite you to bring them to our next meeting. We’ll help them understand how we work together and what their roles and responsibilities may be in the future.
15) Schedule times to discuss finances with your spouse
If you (or your spouse) rarely get involved in the family finances, now is the time to start. Work together to make financial decisions and make sure that each of you understands the overall game plan for your finances. At minimum, make sure that your spouse knows how to access financial accounts and understands your wishes. Tell him or her where the skeletons are buried. Last week as I prepared to collect one of my sons from the University of Illinois for winter break, my wife asked me whom to call if I didn’t come back. They were predicting snow and ice (which I’ve been driving for 34 years), yet I had every intention of reappearing (with my son and his laundry). It did get me thinking, though. I should clue her in a bit more.
16) Identify your goals for 2017
Determine exactly what you hope to accomplish in 2017. Whether you want to earn more money, go on a wonderful vacation, or spend more time with your family, take a moment now to write down your goals. To increase the odds of achieving these goals, consider sharing them with a friend and providing regular updates on your progress.
17) Keep your financial resolutions
Just 8% of people keep their New Year’s resolutions — but by making your goals simple, specific, and actionable, you can increase your chances of being among this select group. Instead of saying: “I will save more for the future in 2017,” say: “I will contribute $4,500 to my retirement accounts by December 31, 2017,” or “I will pay off $2,000 of credit card debt by April 15.”
If you have questions about your future or would like some support in keeping your financial resolutions, we are here to help. Please call us any time. Together, let’s make 2017 a success.
Footnotes, disclosures, and sources:
Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and (Strataxa Retirement Advisors) are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. For a complete description of investment risks, fees and services, review the Brookstone Capital Management firm brochure (ADV Part 2A) which is available from your Investment Advisor Representative or by contacting Brookstone Capital Management.
This views expressed here are those of (Darryl Rosen) and does not does not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to project the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.