Most New Year’s resolutions relate to either fitness or finances. I’m not a real authority on fitness, but I do have a few thoughts on finances. Below are 10 ideas to make sure your retirement planning is on track for the New Year.
1. Automate your saving—Make sure you stick to your savings goals by having money deducted each month from your paycheck or checking account.
2. Increase your contributions—Getting a raise in 2012? Rather than spending it, commit to setting it aside for retirement. Those over 50 can contribute $22,500 to a 401(k) and $6,000 to an IRA in 2012.
3. Create a debt payoff plan—Set a goal to enter retirement debt free. Read this article for help in putting together a plan.
4. Schedule an annual review with your financial adviser—Review how your investments performed and whether or not any changes or rebalancing are in order.
5. Talk with your spouse about retirement—Make sure you’re on the same page with your spouse about retirement. Here are 10 questions to get the conversation started.
6. Test drive your retirement budget—Want to know if your retirement budget is realistic? Try living on it for six months and then use what you learn to refine and improve your plan.
7. Take a mini-retirement—A mini-retirement is longer than a vacation, but shorter than, well, retirement. It’s a great way to learn more about a place or an activity that you are considering for retirement.
8. If close to retirement, set aside one year of retirement expenses in cash—A major risk in the early years of retirement is that you will begin withdrawing money at a time when your investments are performing poorly. Avoid this sequence risk by having a year of withdrawals set aside in cash.
9. Check your insurance coverage—As you age and the kids move out, your insurance needs change. You may want to consider adding a long-term care policy or making changes to your other insurance coverage.
10. Update your estate plan—Everyone needs an estate plan that is current and clearly spells out their wishes. Meet with a trusted adviser to get your affairs in order.
Hopefully a few of those ideas struck a chord with you. If you’d like more information on planning for the New Year, be sure to read this.
Thanks for reading. Touch base if I can ever help.
Joe