2020 has been a difficult year for everyone, and for many, it’s also brought an extra strain on finances. If you’ve experienced some financial hardships and are needing a plan to help boost your account balances or become more prepared for future events, we have some ideas that might help. We’ve broken them down into five areas of focus — let’s dive in!
Create a budget and track your spending. A budget forces you to take a close look at your spending habits and see how much money you can free up for saving. By creating a budget and keeping track of where your money goes, you may notice that you’re spending money on things you don’t need or in more areas than you thought. Budgeting helps keep your eye on the prize, and tracking ensures you don’t spend money you don’t have. You might even find some extra money to put toward your retirement account.
Take control of debt. Make this the year you make an extra effort to pay down (or off) as much of your debt as you can. You can start with paying off the debt with the highest interest rate because it’s costing you the most money. Another option is to pay off the debt with the lowest balance first, so you can feel the progress and get a quicker sense of accomplishment. Having less debt can help lower financial stress, give you more financial freedom, and allow you to focus on other financial goals, such as saving more for retirement.
Review investment mixture and risk. Whether your retirement date is clearly in view or you’re still decades away, it’s important to make sure your investment mixture and risks still match your investment goals and plans. While being aggressive late in your career may serve you well in rising stock markets, it could be disastrous in a declining market and potentially put you at risk so close to retirement. For younger investors, being too conservative could limit your growth potential, causing you to miss out on great earning years knowing you have time to ride out market fluctuations.
Increase retirement plan contributions. The more money you put into your plan now, the bigger your potential retirement balance will be. Increasing your contribution even 1% — which may only be an extra $15, $20, or $25 per paycheck — can make a big difference over the long term. (Tip: Make this an annual practice, if you can.) If your company offers a matching contribution, make sure you’re contributing enough to receive the full match. It’s free money that helps your account grow.
Review your beneficiaries. When was the last time you updated or reviewed the beneficiaries on your retirement account? Or, to ask the question another way: Do you remember who your beneficiary is? (It’s OK if the answer is no; it just means it’s time to review!) If you’ve had a life-changing event such as a marriage or a new baby this past year, now’s the best time to update your beneficiary. If nothing has changed, it’s still good practice to review who you have listed periodically. Doing so ensures that your retirement dollars are split up — and will end up — the way you intended.
We hope we’ve given you some guidance regarding your finances in general (and your retirement savings in particular) for the upcoming year. For more tips on retirement planning, click here or contact us at 888.769.2366. Cheers to a financially healthy 2021!
Did you know?
It wouldn’t be a blog article from us without a bit of money trivia, so here’s a fun financial factoid from Money Smart Guides: The typical lifespan of a $1 bill is just 18 months, while the lifespan of a $100 bill is close to nine years.
Here’s a full breakdown:
- $1 bill: 18 months
- $5 bill: 2 years
- $10 bill: 3 years
- $20 bill: 4 years
- $50 bill: 9 years
- $100 bill: 9 years
- Coins: 30 years
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