Should Your 2017 Resolutions Include a Retirement Plan Review?

It’s that time again already. Time to turn the calendar to a new year. For many Americans, this is also the time to reassess certain areas in their life and make resolutions to change for the better. Common resolutions include losing weight, kicking a bad habit or finally pursuing that lifelong dream.

You may want to include a retirement plan review in your resolutions for 2017. According to a recent Gallup study, 64 percent of Americans say they’re worried they won’t have enough money to retire comfortably. In fact, retirement has been the No. 1 financial concern every year Gallup has conducted the study.1

Of course, there may be good reason to be concerned. Retirement is a substantial financial goal. It’s easy to get off track. Things like child care, home repairs or even medical bills may seem like more pressing financial challenges. Before you know it, you could find yourself behind on your savings goal.

You also may need to review your retirement planning if your life has changed significantly. Life changes can have a big impact on your current finances and your future needs. Below are a few signs that you should reassess your retirement savings efforts in 2017:

Retirement is approaching quickly, and you feel like you’re behind.
The older you get, the faster time seems to fly by. It’s easy for retirement to sneak up on you. The good news is that it’s never too late to start saving. The bad news is, if you wait too long, you may not have many years left to save.

If you’re within 20 years of retirement and feel like you’re off track, take some time to reassess your plans and your strategy. You may need to alter your plans by working longer or cutting back on your planned lifestyle in retirement.

You also may need to start saving more. If you’re age 50 or older, you can take advantage of catch-up contributions to put more money into your retirement plans. For example, catch-up contributions allow you to put an additional $1,000 per year into an IRA, for a total contribution of $6,500. Also, you can contribute an additional $6,000 per year into your 401(k), for a total contribution of $24,000.2

Through a combination of increased savings and adjusted planning, you may be able to catch up on your savings goal. However, you’ll need to start sooner rather than later.

Your marital status changed.
Getting married or divorced can change nearly every aspect of your life, including your retirement plans. If you recently got married, you may have an additional income stream in the household as well as additional retirement assets. However, you could also have new obligations, such as dependent children or even spousal debt. Now is the time to review your plan and see how it’s been impacted.

Similarly, divorce can significantly affect one’s savings efforts. You may have had to split retirement assets in divorce, leaving you with fewer assets to rely upon. Or you may be paying spousal or child support, which limits your ability to save. On the other hand, perhaps you were the lesser-earning spouse and now have to jump-start your career so you can save for retirement. Divorce can be difficult from a financial perspective, for both sides.

You switched jobs.
Changing jobs is often a positive event. Your job change may have come with increased compensation, greater opportunities and more interesting work. It likely also came with a new lineup of benefits and savings options.

Take the new year to review your savings vehicles so you can maximize your efforts. Also, create a budget so you can be sure that much of your increased compensation goes toward increased savings, not increased spending.

Ready to review your retirement planning? Let’s talk about it. Contact us today at Gallagher Financial Group. Let’s connect and start the conversation.

1http://www.gallup.com/poll/191174/americans-financial-worries-edge-2016.aspx
2 https://www.trustetc.com/resources/investor-awareness/contribution-limits

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