Top Financial New Year's Resolutions for Seniors
Updated on Jan 01 2019
Getting finances in order is important as you get older as you have less time to save a nest egg for your future retirement needs. As 2019 approaches, here are some top financial New Year’s resolutions for seniors.
It’s official; today is the last day of 2018. Time seems to move exponentially as you get older, which is why it’s so important to gain control of your finances sooner, rather than later. Time is literally of the essence when it comes to planning for a successful future as, like aging, wealth accumulates faster over time; if you do your due-diligence to save and invest. Compound interest is the magic in the financial equation as it works in your favor to increase your assets over time.
This New Year, be proactive with your finances. Your future self will thank you.
Here are seven financial New Year’s resolutions for seniors in 2019:
1. Save 20% (or More!) of your Gross Income
Ideally, as you get older you should gradually be setting aside a higher percentage of your income into savings. You don’t typically have as many costs as children are often moved out of the house and through college, and mortgages and other financial responsibilities are getting closer to the finish line. A good goal is to save at least twenty percent of your gross income, but if you can maneuver it, save thirty percent or more.
The best way to stay successful when it comes to achieving this goal is to set up an automatic transfer from your checking account to your savings account for this amount every month. If you need the money to pay bills, you can always transfer it back, but try to live off what’s left after your automatic transfers happen. Chances are, if you have developed a budget and know your living expenses, these automatic transfers will grow your nest egg and you won’t even miss the money.
2. Get an Expert Financial Advisor’s Help
It’s important to get your finances organized at any time, but it’s even more important as you get older because your future retirement depends on your saving diligence and you’re running out of time if you are in your 40s or older. Even if you manage all your finances yourself, it’s always a good idea to check in with an expert financial advisor for money-saving and investment tips that are catered to your individual needs.
Enlisting an expert advisor offers peace of mind as they give you better protection against the unexpected. There are financial professionals with different specialties who can help you save money, whether it’s for taxes, your estate, specific monetary goals, your investment portfolio, your retirement planning, and more.
Think of it this way: Spending a few hundred dollars on financial guidance is nothing when it comes to the return you can get for the investment of working with an expert.
3. Consolidate Debt and Create a Plan
If debt has been a problem for you in the past, 2019 is a great time to tackle it with a strategic plan. The first step to reducing or eliminating your debt is to figure out your total debt, the type of debt you have, and what the interest rates are on each debt. Basically, by getting your financial planning under control. You can get organized by either putting everything on a spreadsheet or enlisting a professional financial advisor’s help. Generally, a credit screen will provide the list of your debts and creditors and you can deduce a plan once you have that big-picture information.
Once you’ve figured out your interest rates, look for ways to consolidate your debt or lower your interest rates through 0 percent balance transfer credit cards, personal loans or loan refinance options. Once you’ve figured out the least expensive interest debt consolidation plan, you can start repaying the debt more effectively.
It is very easy to let debt snowball out of control, and as you age it’s important to eliminate debt so you can save for your future. If you find you’re having trouble managing your debt on your own, consult a personal financial advisor for help.
4. Invest Monthly
Setting up automated investments is a great way to start the New Year. Just as automated savings are important, investments will really help you grow your nest egg. Money sitting in a bank account is typically earning less than one percent, and inflation equates to two to three percent, so keeping your money in a regular savings account is not doing you any favors.
Plan on automatically withdrawing money from your savings each month, or directly from your paycheck for that matter, into investments of your choice. Traditional retirement accounts, like a 401k or IRA are smart retirement investments, but there are many choices outside of these traditional accounts using apps to help you automate your investing and get on a regular schedule. Investment sites such as Betterment or Wealthfront can help you automate your finances for monthly investments. A professional advisor can also help you set up a balanced portfolio that fits your individual needs and goals.
5. Track Expenses
Getting in the habit of tracking your expenses will help you stay mindful of your spending so that you’re able to save more. A great New Year’s resolution is to manage your expenses so that you’re more informed of your cash flow and budget.
There are many free apps to help you track expenses, such as Mint.com, Expenses OK or Spending Tracker that can help you manage expense tracking. Most bank accounts also offer spending pie charts to help you see where your money is going.
6. Set a Budget (and Stick to it!)
As you approach retirement, it’s important to have a good idea of your daily, monthly and yearly spending so that you can have a good idea of your overall budget and expenses to help project what you will spend in retirement. Setting a budget will also help you save and invest as you’ll know how much money you can afford to set aside each paycheck.
Once you have a good overview of your spending habits, 2019 marks a great time to stop splurging on some of the luxury purchases, such as restaurants, designer clothing, alcohol and tobacco purchases that are draining you savings.
Setting a budget is all about learning how much spending money you have to work with each month, and then developing conscientious habits to not go over that specified budget. Once a routine is set, your 2019 financial resolution will positively affect your finances for years to come.
7. Monitor Your Credit
The recent Equifax data leak should keep everyone on their toes about monitoring their credit. You can freeze your credit or try other monitoring services, or you can easily and cheaply monitor it yourself. Consider setting a calendar reminder for every few months to review your credit score for any changes of activity.
If you have credit cards with Discover, American Express, Bank of America and others, you can check your FICO score for free at any point. Helpful sites like Credit Sesame or Credit Karma allow you to check your score for free whenever you would like. Keep in mind that the sooner you uncover problems with your credit, the easier those problems are to fix – which is why it’s so important to do regular financial health checkups.
Be Realistic About Your Retirement
A good New Year’s resolution usually involves results that aim towards happiness, so if you are a senior; be realistic about your future financial needs by putting those financial assessments to a test. If you are planning on retiring in the next five or so years, it’s important to try to live off your allotted retirement income to see if it allows you the lifestyle you desire ahead of time. If it doesn’t, adjust your financial plan so that you can save more for a better retirement.
As financial expert Paul Merriman says, it’s important to “hope for the best, but prepare for the worst” when it comes to finances. You have worked hard and deserve peace of mind in retirement, and that often means getting informed about your financis. 2019 is a great time to get that financial education so that you can get fiscally prepared for your future.
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