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Everyone makes bold resolutions at the beginning of the year, and money’s one area that never fails to make the list. People want to spend less and save more.
Whatever your financial situation, one thing’s for sure: The turn of the calendar puts you another year closer to retirement. That can be a scary realization if you’re behind on your retirement savings.
Luckily for you, every new year brings a fresh batch of opportunity. Here are four ways you can turn your future around in 2017.
Opportunity #1: Check Yourself Before You Wreck Yourself
Before you make drastic changes to your financial future, take a deep breath and schedule a sit-down chat with your investing professional. You can review your goals together and check your progress. That way you know exactly how much ground you need to make up and you can outline a plan for success.
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No goals yet? There’s no better time than the present to start thinking big about your future! Like Zig Ziglar said, “If you aim at nothing, you’ll hit it every time.” Just make sure the number you’re working toward isn’t a shot in the dark. Your investing pro can do the math and help you set a savings goal that lines up with your retirement dream.
Opportunity #2: Get Your Budget Back to Business
It’s amazing how far off-track your money can get in just a year. A little loosening of the purse strings here. A big blow to your emergency fund there. Next thing you know, your retirement fund’s catching the crumbs of change found between the sofa cushions.
That’s not good enough! Here’s how saving a few extra bucks here and there—and investing it in mutual funds—could grow your nest egg over the next 25 years.
- Trim the grocery fat with apps. Shopping without a plan is a great way to blow your budget. So use your phone to keep spending in check. These days, it’s easy to create shopping lists, track costs, and even get coupons and rebates. Just think: If you save an extra $100 a month on groceries, you could retire with $130,000–180,000 more in the bank.?
- Increase insurance deductibles. If you’re saving for retirement, you should be debt-free with a fully stocked emergency fund. That means you can afford a higher insurance deductible, which lowers your premium. A recent survey found that increasing your deductible from $500 to $1,000 saves an average of 8.5%, while raising it from $500 to $2,000 slashes another 15%.
- Adjust your tax withholdings. Do you get a big tax refund every year? It’s time to stop loaning your hard-earned dollars to Uncle Sam and use that cash to your advantage each month. According to the IRS, the average tax refund last year was nearly $2,800. Put that extra $230 a month toward retirement, and you could boost your nest egg by $300,000–400,000.
Opportunity #3: Put More Skin in the Retirement Game
If you’re saving for retirement but haven’t hit the 15% contribution rate Dave recommends, that’s okay. Investing something is always better than investing nothing. But staying stuck at a subpar savings can put your future at risk.
Consider this: A 40-year-old making $65,000 a year has a better than 95% chance of getting through retirement with plenty of money by contributing 15% of his or her annual income toward retirement, according to an Employee Benefit Research Institute projection.
Just be sure to keep taxes in mind as you up your percentage. If you don’t have a Roth 401(k), it’s a good idea to invest any retirement cash beyond your company match in a Roth IRA so you can take advantage of tax-free growth. An experienced investing pro can point you toward good growth stock mutual funds with a solid history of above-average returns.
Opportunity #4: Bring Balance Back to Your Portfolio
If you followed Dave’s advice, you divided your investments equally across four different categories: growth, aggressive growth, growth and income, and international. Why such an even mix? Because it means your retirement fund won’t completely tank if one category has a bad year.
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In a perfect world, your investments would all grow at exactly the same rate, and your portfolio would maintain an even mix right into retirement. We hate to break it to you, but we don’t live in a perfect world.
The reality is each mutual fund category grows at its own pace. Over time, that can mean you have more money invested in aggressive growth, for instance, and less in others. When that happens, it’s time to recalibrate. Ask your investing professional to help you balance your portfolio so you can continue to keep risk in check.
Setbacks Don’t Equal Failure
Don’t let past mistakes get you down. We all mess up at one time or another. It’s simply part of being human.
But you do have a choice. You can keep making the same ol’ mistakes—and getting the same stinking results.
Or you can make a change that reinvents your future.
This is your chance to choose the latter. You may not get it right 100% of the time. But a trustworthy pro will help you stay on track and encouraged to keep striving toward your dream.