Most New Year’s resolutions revolve around familiar goals: losing weight, decluttering the house or finally picking up a long-forgotten hobby. But there’s another area of life that deserves attention and can have a profound impact on your future — retirement planning. Whether you’re just starting to think about retirement or refining an existing plan, here are a few resolutions to consider for the coming year.
Max out your employer match. One of the easiest ways to boost your retirement savings is to take full advantage of employer matching contributions to your 401(k) or similar plan. Yet many Americans don’t put aside enough to receive their full match. Don’t leave free money on the table — consider contributing at least enough to secure the maximum match available from your employer.
Increase your emergency savings. An emergency fund is a critical safety net — perhaps even more so as you approach retirement. Try to have at least three to six months’ worth of living expenses saved in an account you can readily access. This can help protect your retirement savings from unexpected costs, such as medical bills or home repairs.
Review your investment portfolio. Your investment strategy should evolve as you get closer to retirement. Take time to review your portfolio and ensure it aligns with your risk tolerance and timeline and consider shifting toward more conservative investments to reduce risk as your target retirement date approaches. Alternatively, you might want to look into a target date fund that will make those adjustments automatically for you.
Create a debt repayment plan. Carrying high-interest debt into retirement can put unnecessary stress on your finances. This year, resolve to tackle your debt by creating a repayment plan you can stick with over the long term. You can use the avalanche method by focusing on paying off high-interest loans first, such as credit cards, while continuing to make minimum payments on other obligations. This approach will help you save the most over time. Alternatively, the snowball method involves paying off smaller debts first to build momentum and motivation by scoring more frequent “wins” early on.
Reassess your monthly budget. A well-managed budget is key to maximizing your retirement savings. Take a close look at your current expenses and identify areas where you can cut back. Even small changes in discretionary spending, like dining out less or canceling unused subscriptions, can add up over time. Redirect these savings into your retirement accounts to keep building your nest egg.
Plan for medical and long-term care costs. Health care is often one of the most underestimated expenses in retirement. Research Medicare options, including supplemental coverage, explore health savings accounts (HSAs) and consider long-term care insurance to protect your assets. You can better anticipate future costs by staying informed about changes in health care policies that might impact your retirement planning.
Estimate your future Social Security income. Social Security will likely play an important role in your retirement income, so it’s essential to understand how much you can expect to receive. Use the Social Security Administration’s online tools to estimate your benefits. Knowing this number will help you better plan for any income gaps and create a more accurate retirement budget.
Work With a Financial Professional
Retirement planning involves multiple moving parts, from budgeting and investments to taxes and more. A Financial Professional can help you create a cohesive and comprehensive strategy. They can work with you to identify potential gaps, refine your approach and help you stay on track to meet your goals. With their guidance, you can gain confidence and a clearer understanding of your financial plan, helping you make better informed decisions about your future.