New Year’s resolutions don’t have to focus solely on physical health and wellness. Gaining a better handle on your current financial situation and charting a path to a sustainable retirement lifestyle can be an equally meaningful resolution for the new year.
Impactful Resolutions Should Start With an Honest Assessment
Resolutions should be built on an honest assessment of one’s current situation. This applies to all types of resolutions, whether related to health, lifestyle, or finances. There are a few key questions you can answer to ascertain where you currently stand on your finances and savings:
- What are my financial strengths?
Identifying where you’re thriving, whether it’s good savings habits or progress on debt repayments, can help you establish a baseline from which to progress. - What challenges do I face?
Many retirement savers and investors have financial characteristics they’d like to improve. Maybe you think you spend too much on dining out, subscribe to too many services, or make insufficient contributions to your retirement savings. - What are my short-term and long-term goals?
Most retirement savers have at least some short-term and long-term financial goals, such as building an emergency fund in the short-term and becoming debt-free in the future. Clarify what you want to achieve and define what success looks like.
Potential Ideas for Financial Resolutions for Phoenix Savers
Create a Budget if You Don’t Have One or Revise Your Existing Budget
Many households don’t have a formalized budget, and they may not require one for the sake of day-to-day, short-term financial stability. However, even households that live comfortably today could benefit from a budget designed to achieve long-term retirement savings goals.
If you’re maximizing your current contributions to your employer-sponsored retirement savings, you may want to look into separate accounts to accelerate progress toward early retirement. Alternatively, if you already have a budget that you sometimes neglect, you may want to set new guidelines for yourself or fine-tune it for a more sustainable 2025.
Pay Down Debt
Not all debt is equal, especially in the context of long-term savings and financial health. High-interest debt, such as credit cards, can hinder a household’s progress toward retirement savings goals. If you currently carry high-interest debt, or your interest payments are interfering with your ability to reach your retirement contribution goals, you may want to adjust your repayment approach.
Increasing Retirement Contributions
Maximizing your 401(k) or IRA contributions allows you to take advantage of employee matching and the benefits of compound growth, but savers are not restricted solely to these types of retirement savings vehicles.
For example, if you’re someone who doesn’t have an employee-sponsored plan and you only invest the maximum contribution into your self-directed Roth IRA each year, you may want to investigate alternative accounts to increase your annual retirement savings.
Make sure you understand the tax implications of retirement savings options before you begin investing. It may be beneficial to discuss both current and future tax implications with the retirement planning professionals at Fullerton Financial Planning.
Diversify Your Portfolio
One financial New Year’s resolution that might cost you very little is diversification. If you, like many Arizona retirement savers, don’t regularly rebalance your 401(k) or IRA, or investment growth has led to your portfolio being overweighted in some categories, now might be a great time to rebalance your investments.
Retirement savers typically become more risk-averse as they approach retirement. If you haven’t adjusted your investment mix to achieve the ideal balance of risk and growth for your time horizon, the new year may present an ideal opportunity to do so.
Learn How Fullerton Financial Planning Can Help
The financial advisors at Fullerton Financial Planning help Phoenix-area retirement savers identify current weaknesses in their long-term savings plans and develop solutions to achieve their financial goals. We tailor our advice to your current financial situation, risk tolerance, and time horizon.
You can learn more about our process by attending one of our webinars or in-person seminars in the Phoenix metro area. We encourage interested investors to call us at (623) 974-0300 to schedule a free consultation with one of our advisors.
