I don’t know about you, but I personally am not a fan of New Year’s resolutions. I find that I start off every year excited about my pledge to lead a healthier lifestyle—promises like eating better, exercising regularly and getting more sleep. But then by March, when that gym membership or “healthy eating” regimen hasn’t gone according to plan, I feel guilty for not following through on what I promised. That’s not a great feeling.
The problem is that most resolutions set us up for failure by demanding too big a change in our routine to keep. Fortunately, resolutions to get financially fit for your retirement are easier to keep than heading to the gym at 5 a.m., thanks to a few simple habits that fit easily into your current routine. Here are six steps you can take today to start 2017 off on the right foot and become a more confident retirement saver:
1. Start early
They say people who work out first thing in the morning are more likely to stick to their routine. And the same principle applies to saving for retirement. If you’re early on in your career, starting to contribute now (even just a little bit) is important. If you’re more established in your career, now’s the time to think about upping your contributions.
2. Don’t forget to stretch
If your employer offered you a raise, how likely would you be to turn it down? If you don’t stretch your contribution to maximize the company match, it’s like turning down a raise. Don’t leave any money on the table. Take advantage of all your plan’s benefits.
3. Pace yourself
How do you run a marathon? You warm up, start slow and then pick up the pace as soon as you can. The same goes for retirement saving. Your plan’s auto features (like auto-escalation) are a relatively painless way to help increase the pace of contributions. So is increasing your contributions with your annual raise. Retirement savings is a marathon where the pace you set today pays off tomorrow.
4. Monitor your progress
When you review your investments, remember markets are unpredictable. It’s all too easy to get hung up on a dip here or there. Instead, focus on what you can control: Have you set a retirement income goal? Are you maxing out the match? And, if you’re at the IRS limit for contributions, have you considered saving in other tax advantaged accounts, like an IRA?
5. Know your strengths
Even the most successful athletes need a great coach. They know what they can do, and they know where they need help. Considering the importance of your retirement savings, do you really have the time to actively manage and monitor your asset allocation? If not, your plan probably needs some “coaching.” For example, a target date fund automatically aligns your risk exposure to where you are in your career. There may also be other options to help you manage your portfolio.
6. Keep your eye on the ball
Take advantage of retirement income calculators, like CoRI, to understand how far your savings are actually going to take you. The earlier you identify if you have a gap, the more time you have to get back on track.
This year, let’s all invest in our financial well-being. Use the game plan outlined above to get a head start on saving for retirement. Adopting these habits is easy to do—and can be a New Year’s resolution you actually keep.