Retirement Resolutions for the New Year

Start the year fresh with a retirement game plan to get closer to your financial goals.

New Year’s resolutions are the perfect time to evaluate where you are and where you want to go. Whether it’s eating healthier or getting serious about retirement planning, having a positive attitude and being open to change are the first steps to success. Here are six practical ways to turn challenges into opportunities so you can reach your retirement goals and enjoy life along the way.

1. Assess, don’t stress

Stressed out? Take a breather and do something you enjoy before crunching numbers. Studies have shown that the effects of stress on decision-making can lead to negative outcomes, such as misjudging positive financial opportunities (financial gains) while increasing risky behavior when the impact is negative (financial losses)1.  The solution to easing your stress reflexes? Schedule a planning session when you have time to think and talk through numbers and goals rather than assessing finances and retirement savings when reacting to a stressful situation. The best thing about financial and retirement planning is it’s never too late to start.

Take action: Block time on the calendar to sit down and evaluate your current financial and retirement plans. This can be a great opportunity to make a step in the right direction. Go for a walk or do something you enjoy before and after your session to counteract any negative effects of stress.

2. Set practical goals

Many of us dream about the magic workout or financial investment that will not only help us reach our goals but get us to the finish line faster. The reality is everyone has individual needs and a one-size-fits-all approach rarely succeeds. A better way to make your dreams come true is to identify practical goals. Setting a goal that you’re swearing off all carbs for a year might lead to disappointment as could investing too aggressively or not saving enough.

The key to successful retirement planning is balance. This applies to having a balanced portfolio and a balanced approach to short and long-term goals. Examples of short-term goals could be evaluating your budget to see where you can cut costs and save money. Paying down debt is another practical step that can provide tangible results within a set timeframe. Long-term goals could include researching retirement savings options that can help you plan for 20 years or more of retirement expenses, including housing and costs of living.

Take action: Break it down. Write down short and long-term goals you’d like to achieve. Include two or three steps you’ll need to take to achieve each goal. Then tackle each task one at a time. 

3. Look for creative ways to save

If you Google, “creative ways to save money” you’ll get 3 million results in about 1 second that include tips from not using ATMs that charge fees to waiting 30 days before buying that “must-have” item, plus countless more ideas. However, your lifestyle really dictates what you can or can’t live without. Do you have a gym membership you use all the time? Then axing it from your budget is probably not right for you. Taking care of your health is actually a great long-term investment. But if you go to the gym a couple times a year, you might be be better off reinvesting in quality walking shoes to save on membership fees (and maybe even gas) and investing the rest.

Take action: No one knows your habits better than you. Make a list of how you could save money this year and identify the strategies you are willing to try. If saving on taxes made your list, consider researching the tax-deferral benefits of an annuity and talk to your tax professional about what solutions are right for you.

4. Track your progress

Life is busy. Even if you’re making positive strides on your retirement resolutions for the New Year, if you don’t track your progress all of your efforts could get lost in the shuffle. When you set a goal, make a change, or see results, write it down! You can learn a lot from yourself in so many ways: identify patterns or pitfalls, revisit goals, or give yourself gold stars!

Take action: Start to document your efforts. If you’re a fan of smartphone apps or digital tracking tools, look for apps like Mint or Personal Capital. If you prefer putting pen to paper, look for personal planners at any office supply store to record and monitor your progress. 

5. Celebrate small (or big) achievements along the way

We weren’t kidding about the gold stars. Studies have shown that celebrating progress can help reinforce positive behavior in the brain by triggering motivation2. Whether by simply recognizing efforts or indulging in your favorite food, reinforcing behavior can lead to a longer term commitment to a resolution. Longevity can be challenging, which is why only about eight percent of people actually achieve their New Year’s resolutions3. Stack the odds in your favor by measuring and celebrating your successes no matter how small.

Take action: Think about what motivates you. Chocolate? Going to the movies? Talking a walk? Getting a high five from family or friends? Identify a few ways to reward success and then deliver when a goal is achieved. 

6. Build momentum

Saving for retirement is a process and a journey that doesn’t happen overnight. Build upon the strategies that work best for you and reevaluate ideas that hold you back. If the key to retirement planning is balance, then the secret to success is momentum. There’s no greater motivation that seeing results: “Don’t call it a dream, call it a plan.” — Author Unknown.

Take action: Keep going! By setting practical goals for retirement, you can get a clearer picture about how to reach your retirement dreams. Whether that’s funding a bucket list or planning for retirement income, sticking to your resolutions will help make those small savings add up and create peace of mind.

 

Sources: 
1. Science Daily, "From Stress to Financial Mess: Acute Stress Affects Financial Decision Making," 2009. 
2. Vanderbilt University Research News, “Dopamine Impacts Your Willingness to Work,” 2012. 
3.  Forbes, “7 Secrets of People Who Keep Their New Year’s Resolutions,” 2016. 

The information provided is for educational purposes only and does not constitute advice. For specific details on how this may apply to your personal situation contact your personal financial advisor or insurance agent for more details. American Equity contracts are only sold through independent agents. To obtain a listing of agents in your area contact your state’s insurance department.