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Dave Ramsey's Smartvestor

6 Retirement Planning Resolutions for 2019

January 15th, 2019 | 3 min. read

By Jacob Schroeder


SVBlog-Resolution-moneyEven if you were in bed before the ball dropped and missed all the confetti and flutes of champagne, you may still be taking part in one New Year’s tradition: making resolutions. Generally, we make resolutions to adopt certain habits that will improve our lives over the coming year. It’s like living life with a clean slate and new set of goals.

In some respects, this is how people plan for retirement. After all, it is a new beginning. So, this year, if you’re approaching the twilight of your career, why not resolve to take important steps that will prepare you for the next chapter in life.

Here are six retirement planning resolutions for the new year.

1. Play catch-up in your retirement savings

For 2019, the government increased annual maximum contributions for your retirement accounts. The amount you can contribute to a workplace retirement plan, such as a 401(k), went up from $18,500 to $19,000. Workers age 50 and older can make catch-up contributions up to $6,000 to their workplace accounts, for an annual maximum of $25,000.

Meanwhile, the amount you can save in an Individual Retirement Account goes up from $5,500 to $6,000. Catch-up contributions for IRAs are $1,000, letting workers age 50 and older save up to $7,000 each year.

To work toward maxing out your retirement accounts, look for ways to reduce expenses. Around this time you may be an empty-nester or soon to be one, so consider using any newly available cash to boost your retirement accounts.

2. Build or grow an emergency fund

Retirement can last decades. In that time, you could face a medical emergency or unexpected home repairs, and you likely need to buy a car or two. According to Money Magazine, “78% of Americans will have a major negative financial event in any given 10-year period.” That’s why it’s important to have a healthy emergency fund so you have quick access to cash.

A good rule of thumb is to save a minimum amount equal to one month of expenses, but most people will need to save enough for 3-6 months. The optimal amount you should save depends on personal factors, such as your retirement income and expenses.

3. Eliminate bad debt

Debt is a growing problem among older Americans. In 2016, the average debt in families in which the head of the household is age 75 or older was $36,757. That is up from $30,288 in 2010, according to the Employee Benefit Research Institute (EBRI).

You should retire as much debt as possible before you retire. If you don’t, you’ll face the hard reality of having to pay off things from your past instead of not only living your dreams but also living comfortably.

Although the goal is to eliminate all forms of debt, whether good or bad, you want to firstly get rid of bad debt – high interest, revolving debt like credit cards -- which charges you more in rates and fees. Be sure to follow Dave Ramsey’s Baby Step 2: work on your debt snowball. Start with your lowest balance and work your way up.

4. Meet with a SmartVestor Pro financial adviser

Have you looked at your financial plan recently? Do you even have one? Do you know how much you need to retire? If you’ve said no to these questions, then you should really speak with a financial adviser. Even if you said yes, it’s recommended that you meet with an adviser at least once a year to make sure you’re still on the right track.

It’s worth it. According to the EBRI, those who calculated what they need to save for retirement had higher savings goals and were more likely to feel very confident about affording a comfortable retirement. Additionally, in a survey by the Insured Retirement Institute, baby-boomers with financial advisers were twice as likely to feel confident about their retirement savings as those without an adviser.

Your retirement dreams are what drives your investment plan. And, it’s your investment plan that will help you live those dreams. A financial adviser is who can help you align your dreams with your investment plan.

5. Focus on those financial goals, not the market

Who knows what the year holds for capital markets. What we do know is that if you stick with your investment plan, you’re likely to reach your financial goals. For example, a joint study by the Employee Benefit Research Institute and the Investment Company Institute found workers who kept their money in their 401(k)s from 2007 through 2012 had an average balance 67% higher than those who abandoned their plans during the financial crisis.

6. Start living a healthy lifestyle

This may sound like a New Year’s cliché, but maybe you’ll be apt to stick with a diet and regular exercise knowing that your health has real financial consequences. A study by the National Bureau of Economic Research found a strong relationship between health and wealth. Those in poor health had much lower assets than those in good health. There is also a difference in the amount paid on health care. A 65-year-old in good health paid an average annual health care cost of $4,450 compared to $4,760 paid by someone in poor health, as detailed in a report by HealthView.

You don’t have to invest a lot of time, money or energy to live a little healthier. The Centers for Disease Control and Prevention recommends older adults get 2 ½ hours of exercise per week. That’s just a little more than 20 minutes per day.