The new year is a fantastic time to review your financial strength, look over your budget and make big plans for the new year.
Looking to make some financial New Year’s resolutions for the coming year? Here are 3 retirement resolutions to consider.
1. Identify Your Financial Goals
The new year is a logical time to take stock of your current assets, as well as your goals for the future.
Your need and urgency will obviously vary based on your age. If you’re 25, then you still need to know where you stand, but you have plenty of time to make corrections. Once you hit 40 or so, it’s more time-sensitive to ensure you’re making the right moves and planning adequately for your eventual retirement.
With long-range goals such as retirement, I always encourage folks to take a hard look at the end game. You might want to purchase a new home or travel more during this time of your life. What is it that you want to accomplish at those different stages of your life? To increase your chances of success, be as specific as possible.
Take some real time to review what financial qualities you can improve this year.
2. Push Yourself to Increase Your Savings and TSP Contributions
If you’re looking to put more away for retirement, push yourself to increase your Thrift Savings Plan (TSP) contributions. You want to make sure that if you’re a FERS employee, that you’re putting in at least enough to get all the free money out of TSP, which is the FERS match. In order to do that, FERS employees must put in 5% of their pay, and their agencies end up putting in 5% of their pay as well.
Every single pay period, you’re going to get that free money as long as you’ve spread out your contributions over all pay periods in the year.
Regardless if you’re a CSRS or FERS employee, can you challenge yourself to contribute more to the TSP? Even 1% more? How can you max out the TSP at $22,500 per year? How can you get the full catch-up contribution of $7,500 per year (available in the year you turn 50)?
Wherever you’re at today, how can you step up your game just a little bit and make that work in your budget? Those small increases today can add up to big results in the future.
3. Plan for the Unexpected and Establish an Emergency Fund
Without an emergency fund, you can end up wiping out your retirement savings or running up credit card debt. Having that emergency fund allows you to buffer or cushion your normal household expenses when those unexpected things like car or household repairs come up. Be sure to only use this bucket of money for truly unexpected and necessary expenses – this is not for vacations, new cars, that big-screen TV, etc. This is only for true emergencies, and you want to ensure it’s there if you need it.
Stay on Track This Year
Chances are at some time in your life, you’ve made a New Year’s resolution — and then broken it. Stay on track by making smaller, realistic goals and sticking to them. Tiny steps may lead to big results eventually.
The same can be said about your retirement planning — even small changes can yield big savings in the long run!
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ABOUT THE AUTHOR:
Chris Kowalik is a federal retirement expert and frequent speaker to federal employee groups nationwide. In her highly-acclaimed Federal Retirement Impact Workshops, she and her team empowers employees to make confident decisions as they plan for the days when they no longer have to work.
As the developer of dozens of highly-regarded retirement planning materials for federal employees and the creator of the FedImpact Webinar and the FedImpact Podcast, Chris has also analyzed the challenging retirement scenarios for thousands of federal employees – helping them to avoid costly mistakes, and highlighting opportunities for them to gain greater financial security in their retirement years.
Chris’ candid and straightforward nature allows employees to get the answers they need, and to understand the impact these decisions have on their retirement. After all, if what you thought was true wasn’t, when would you like to know?