BY JOHN CONROE, CFP, AFIM
Early in the year is a great time to stop and
take stock of your life, your goals and your
accomplishments. By and large the most commonly
referenced New Year’s resolutions involve
money and health. A quick Google search finds
saving money and managing debt right up there
with losing weight and quitting poor health
But just when the coldest part of the winter
makes exercise less convenient and comfort
food harder to ignore, the arrival of tax
documents and year-end statements makes it a
natural time to review your retirement planning.
Dreaming of golden years spent on sun soaked
beaches is also a great incentive to freshen up
your personal escape plan and maximize your
chances of a worry free retirement when the
winter winds blow.
So let’s take a look at four resolutions that
can boast your odds and bring peace of mind as
you approach life’s second act.
Take time to assess your current retirement
One of the primary steps in financial planning
is gathering information and analyzing the situation
as it stands today. As the normal flow of tax
documents, year-end credit card and asset account statements flows in, keep a running tally.
Fill out a balance sheet, adding up all your
assets and subtracting your debts. Take a few
minutes (with plenty of cold, snowy days here
in the Northeast, that shouldn’t be hard to find)
and utilize a good, robust on-line retirement calculator like the Adirondack Trust’s Retirement
Self-assessment Tool – that is found on
our Investment and Planning section (then go
to the right hand side of each page).
Be as accurate as you can in projecting your
retirement expenses or barring that, use at least
75 percent of your current pre-tax income. Don’t
be afraid of the results, instead embrace them
and be glad you still have time to prepare, taking
satisfaction in knowing that you have already
taken the first step by assessing where you stand.
Find more money to save:
If you’re able to meet your bills, put food on
the table and cover unexpected expenses then
you can probably find a few dollars here or there
to direct toward your future retirement. If you
expect a tax refund, allocate part or all of it to
your IRA. Same thing with any year-end bonuses
you might have earned.
But even if none of those are in the cards,
it’s likely you can still find something to cut out
that will let you increase your regular retirement
contribution by a few more dollars. There are
countless techniques for tricking yourself into
Save every $5 bill that comes into your hands.
Round up every purchase or check amount in
your register then sweep the excess into the
retirement vehicle of your choice.
Brown bag your daily lunches and tell your
Human Relations department to up your
IRA/401(k) contribution by the amount you
used to spend on salads, burgers and sandwiches.
Figure your 2015 weekly gas savings from
lower oil prices and put it away. Get around to
refinancing your mortgage at today’s ultra-low
rates and save the savings, Shop your home
and auto insurance (and umbrella) and bank
Renegotiate your cable and cellular plans and
set up an auto-savings for the monthly amount
you wrestle back from your providers.
The point is that saving more money is always
better, and though it seems like its harder, it can
actually be quite easy. The more you put payroll automation and digital banking to work for you
the less you’ll miss the money. Every dollar you
save this year will have time to grow and provide
for you down the road.
Consider your current asset allocation:
At Adirondack Trust, we spend time with our
clients to figure out their goals and needs, tolerance
for risk and time horizon. This information
helps us arrive at an investment objective. Do
they need growth, or is income a priority? Can
they handle market swings and do they have the
time and resources to wait for a recovery? These
answers bring asset allocation into focus. How
much to commit to growing but more volatile
stocks, what percentage should be in safe, yet
low yielding bonds and finally, what level of
instantly available cash is required.
Once we know this information we can build
out a new portfolio or rebalance an old one. This
is a great time of year to consider all those same
factors as they relate to your retirement portfolio
and to make any subsequent changes.
Meet with a financial planner for a
Eliminate the hard work and have a professional
review your finances. This is the teamwork
approach to meeting your retirement
goals and relieving your worries. Look for strong
resources, solid credentials and a reputation
for integrity. You can find planners that will
charge you flat fees, work by the hour or simply
wave fees if you move some assets to them for
professional management. Sometimes it’s best
to get an outside view of your situation. We do
it with doctors for health issues, mechanics for
automotive concerns, lawyers for legal problems
and accountants for taxes. Why not put a professional
financial planner on your team as well?
Resolutions are great if you actually achieve
all or even part of them, but they can be a great
source of guilt and worry if you fail, and they
usually represent a real need. This year, resolve
to stack the odds in your favor, for 2015 and for
the rest of your life.
Conroe is a financial planner and investment
officer with Adirondack Trust Co.
Photo Courtesy Adirondack Trust Co.