By Deborah Jeanne Sergeant
Have you made a New Year’s resolution to start exercising, drink more water, stress less or lose that extra 20 pounds?
All of these can improve your health; however, it is also important to look for ways to improve your financial health in these turbulent times.
Living within one’s means is always a good idea, and is especially important for people approaching retirement age, according to Randy L. Zeigler, private wealth adviser and certified financial planner with Ameriprise Financial Services, an Ameriprise Private Wealth Advisory practice in Oswego.
“Manage cash flow wisely,” he added. “Keep debt balances and monthly debt payments at zero or low levels.”
One means to do this is to use credit cards only for their convenience and to pay off their balances monthly. Where consumers get into trouble is buying items when they do not have the money to pay for them.
“Do not use credit cards as lifestyle expansion methods,” Zeigler said. “The high interest rates ultimately just reduce your lifestyle and available cash.”
He also wants more people to resolve to be generous with their resources as they become aware of needs in their community.
“Plan for long-term financial goals, including one’s own retirement needs and consider assisting children and grandchildren with longer-term education goals, if you are able,” Zeigler said. “Invest in variable equity investments to build capital toward one’s long-term goals. Avoid making investment decisions based upon fear and emotions.”
Planning for retirement is one of the top priorities listed by Ethan Gilbert, partner and certified financial planner chartered financial analyst at Rockbridge Investment Management in Syracuse.
“If you’re still working, try to save as much as you can in retirement plans like a 401k, or if self-employed, an individual 401k or IRA,” Gilbert said. “People in their young 30s don’t have the capacity to save as they’re having children and they have a mortgage. But once the house is paid off and your children are grown, if you don’t have a lot of retirement savings, those last five or 10 years are your opportunity to significantly increase or maximize what you’re putting into your 401k.”
Gilbert also advises a couple in their 60s to resolve that the higher wage earner delay receiving Social Security and continue working — and saving — until age 70.
“The-lower income-earning person taking their benefit might mean tapping into your IRA or 401k but it’s worth it, especially in today’s low earning environment,” Gilbert said.
For example, a husband who dies at 83 will leave his widow the higher benefit to use until she dies several years later, since the lower benefit of the two drops off.
Christopher W. Rheaume, accredited asset manager specialist and financial adviser with Edward Jones in Auburn, wants people to resolve to look at their finances and tweak their financial plan every year.
“At the end of the year, evaluate your excess discretionary spending,” he said. “If you’re in debt, create a debt reduction plan. Especially for those close to retirement, automate your savings and investments so you can remove the temptation to spend money that should be saved and invested. It creates a sense of security and freedom. If you have evaluated your discretionary spending and get out of debt and you’ve automated savings and investing, it gives you freedom to do what you want to do. Often, people spend and see if there’s something to save.”
Looking at spending and saving can also provide a more realistic look at what retirement expenses will be like and if a couple needs to adjust their expectation for their standard of living based upon the money they will have available.
Rheaume also wants more people to plan to have three to 12 months of cash on hand for emergencies.
In addition to these measures, it is important to put legal documents in order. That is one of the resolutions advised by Daniel Cuddy, personal financial representative and certified financial planner at Cuddy Financial Services in Auburn.
“You should review your legal documents such as your will, healthcare proxy and power of attorney to ensure they are up to date with the appropriate disposition wishes, beneficiaries, and designated agents,” Cuddy said. “It would be best if you took care to ensure that all of these documents are up to date and still reflect the best planning for you, considering the current and anticipated tax environment. If you do not have any of these documents, you should make sure that you make an appointment with your attorney to discuss the importance of having them.”