The new year is here. Do you have a list of resolutions? Do you have plans to hit the gym, pursue a new hobby or finally take that big vacation? The new year is the perfect time to reassess your situation and develop a strategy to make big changes.
If you’re like many families, your list of resolutions could include some financial items. Maybe you want to get serious about eliminating debt, or perhaps you want to get your retirement savings back on track. Below are five simple steps you can take to regain control of your finances in 2018:
Raise your 401(k) contribution.
Retirement is a common concern for many American families. According to a 2017 study from Gallup, more than 50 percent of Americans said they were worried they wouldn’t be able to afford retirement.1 If you’re concerned that you are behind on your retirement savings, you have company.
However, you can overcome your savings gap by putting more money into your retirement account each year. You may not be able to afford to significantly increase your retirement contributions all at once, but you could raise your contributions gradually over time. For example, you could increase your 401(k) contribution by 1 percentage point each year. Even that gradual increase could have a big impact on your savings.
Tackle your debt.
Struggling with debt? Debt is a fact of life for many American families. In some instances, debt can be a useful tool. For example, you may have used debt to finance the purchase of your home, your car or even your education.
However, there are other types of debt that can be corrosive to your financial stability. Credit card debt is a primary example. If you’re struggling with high-interest credit card debt or other costly loans, make 2018 the year you take action.
Start by documenting all your debts, their balances and specific interest rates. Then develop a paydown plan to reduce your balances over time. You also may want to look at consolidating your debt into a lower-interest vehicle. That could help you pay down your balances at a faster rate.
Consolidate retirement accounts.
Have you left 401(k) balances behind at former employers? Do you have multiple IRAs? It can be difficult to implement a unified, cohesive investment strategy when your savings is spread among multiple accounts. In fact, it’s possible that you have an overall allocation that isn’t aligned with your objectives and risk tolerance.
Think about consolidating those accounts into one IRA. That would allow you to retake control over your investment strategy and implement a plan suited to your specific needs. A financial professional can help you consolidate your accounts and develop the strategy that’s right for you.
Reassess your risk tolerance.
Speaking of your investment strategy, when was the last time you assessed your risk tolerance? Many people make the mistake of selecting their investments when they open their accounts, and then they fail to review or adjust that strategy over time. The problem with this approach is that your needs and your risk tolerance may change as you get older. Many people find that they become more conservative as they approach retirement.
Take some time this year to analyze your investment strategy and determine whether it’s still aligned with your risk tolerance. Have you grown more conservative as you have gotten older? Or conversely, do you now feel like you can afford to take a more aggressive approach? Make the necessary adjustments so that your investment strategy best reflects your tolerance for risk.
Review your life insurance protection.
Finally, any solid financial plan is built on a foundation of risk management. It’s difficult to achieve your financial goals if you are also exposed to sizable risk. Perhaps the greatest risk your family faces is your premature death. That’s especially true if you are the primary breadwinner in the family.
Review your current life insurance protection and your family’s needs. Would your current coverage allow your family to maintain their standard of living in the event of your death? Would your family need liquidity to pay for final expenses, outstanding debt or other sizable financial obligations? Have you added children, or has your family changed in some other way, that would require you to purchase additional life insurance coverage?
Ready to take back control of your family’s finances in 2018? Let’s talk about it. Contact us today at Safe Retirement Strategies. We can help you analyze your needs and refer you to a financial planner. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
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Safe Retirement Strategies
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