Getting close to retirement is exciting, but it often brings a little worry about your financial future. The closer you get, the more you may be concerned with the rising living costs and if your finances are on track to allow you to live as planned when retirement comes. Whether your retirement is within the next couple of years or the next five, the new year is the perfect time to make financial resolutions to help you toward your retirement goals. Below are just a few financial resolutions to consider this year.
Work on Fully Funding Your Emergency Fund
While an emergency fund is crucial when working, it is equally important when you retire. Emergencies will happen when you least expect it, and if you find yourself on a tighter budget during retirement, your emergency fund will be more crucial than ever. A good rule of thumb is to have three to six months of expenses saved up, which should be able to cover sudden house repairs or medical expenses.1
Continue to Save
Even if your savings are where you want them to be, you want to keep saving so that your money will continue to grow, and you will have a buffer for emergencies or higher-than-normal inflation rates. A good rule of thumb is to place between 5 and 10% of your gross income into yearly savings. If you are able to put in more, that is even better and may help you save a little on your end-of-year taxes as well.1
Make a Pre-Retirement and Post-Retirement Budget
One excellent resolution to make to help you stay on your desired financial track is preparing and sticking to a budget. Ideally, you will want to make a budget for your current financial situation and what your post-retirement situation may look like. This way, you will know how much more you need to save. Consider using a budgeting app or spreadsheet software that allows you to record actual expenses so that you are able to see where your budget may need adjusting.2
Pay Off Your Debt
Ideally, you will want to retire as debt-free as possible. Without the stress or debt payments, you will likely have more funds to live comfortably in retirement and have less stress about money. If you have a lot of high-interest debt, you may consider consolidating it into a low-interest loan with terms allowing it to be paid off before you retire. You may also want to consider taking advantage of zero-interest balance transfers so that you are able to pay down the debt faster without accruing more interest.2
Sign Up for Credit Monitoring Software
Another resolution to make is signing up for credit monitoring software. Identity theft is increasing, and becoming a victim of it may lead to significant financial problems and low credit scores. Credit monitoring software will also help you to keep an eye on your debt and offer insight into its financial management.1
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
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Footnotes:
1 5 financial resolutions for 2023 and how to accomplish them, Fortune, https://fortune.com/recommends/banking/financial-resolutions-for-the-new-year/
2 10 financial New Year’s resolutions to set now and achieve in the new year, CNBC, https://www.cnbc.com/select/financial-new-years-resolutions/