Retirement Planning Resolutions for the New Year
The time for setting goals and identifying new leaves to turn over has once again arrived. Resolutions ordinarily concern health, career and establishing better habits; however, a retirement planning firm suggests that retirement planning be among them and identifies resolutions toward which to steer participants.Pentegra says
that in providing these ideas, it seeks to break inertia. In a press release, Pentegra Senior Vice President Richard Rausser says “The prospect of saving enough money to comfortably retire can be overwhelming. Afraid of never being able to reach a financial goal, inertia seems the preferable course of action compared to taking the actual steps necessary to make a positive change.” He adds that “realistically, small actions really can often lead to big results.”
Behaviors to foster among participants should include the following, Pentegra suggests. 1. Setting a realistic retirement date.
Considerations should include an evaluation of a participant’s current state and how long he or she expects to work.
2. Calculating a retirement savings goal.
This can entail more than simply estimating how much a participant will need; it also can include visualizing a desired retirement lifestyle. And it may be a useful exercise, Pentegra suggests, for the following questions to be considered:
- When does the participant plan to retire?
- How much money will the participant need each year?
- Where and when does the participant plan to obtain retirement income?
- Are the participant’s investment expectations consistent with the performance potential of his or her investments?
3. Starting to save as early as possible.
- Which of the participant’s expenses will change during her or his retirement?
Participants should remember that funds they set aside and invest now will grow through compounding. 4. Saving as much as realistically possible.
Encouraging participants to analyze their expenses to identify areas in which they can spend less and save more can help to bolster their retirement accounts. Pentegra points out that spending $5 per day on coffee for 260 work days per year represents $1,300 per year, and $52,000 a 40-year career that has been foregone for the future and spent on short-term pleasures — and even more than that when compounding is factored in. 5. Increasing the 401(k) savings rate every time a participant gets a raise.
Raises in pay provide an ideal opportunity to also increase the amount of money set aside for retirement. 6. Taking advantage of catch up contributions.
This can be an especially helpful way to participants who are age 50 or older to bolster their 401(k) balances. 7. Regularly reviewing portfolios.
It can be helpful for participants to encourage them to periodically rebalance their account allocations so they can stay on course to meet their goals. 8. Planning with their partners.
It can help participants to remind them of the hazards for a couple of relying only on the retirement savings of one and the advantages of making retirement plans together.