Broker Check

2023 Financial Resolutions

January 04, 2023

Financial resolutions often top the list of positive changes many wish to make once the clock strikes midnight on a new year. According to one survey, 53% of people who made 2023 New Year's resolutions are prioritizing their finances in the new year, MarketWatch reports. For those nearing retirement age, their New Year's resolution list may include some or all of the financial resolutions outlined below.

Keep Saving for Retirement

Even those who have already started saving for retirement should consider increasing their contributions to qualified retirement plans. That could mean setting aside an additional 5% of your monthly paycheck in a retirement account. If you receive matching contributions from your employer, this can significantly boost your savings even further.

Calculating how much money you need to retire means accounting for factors like current annual income, the inflation rate, and taxes. Indeed, rising inflation and interest rates could significantly impact your ability to live the kind of lifestyle you want in retirement. This is why working with a financial advisor can be so critical in those pre-retirement years, so you can ensure you'll have enough saved to live off your nest egg. After all, the last thing you want is to be cash-strapped in retirement, making cash flow critically important for your golden years.

Trim Your Spending

You can save a lot of money simply by eliminating unnecessary expenditures. Identify areas where you can cut back on expenses and take advantage of them. For example, try cooking at home more often if you eat out regularly. If you're paying a lot for groceries, compare prices at different stores or look into buying in bulk. It's even worth shopping around for lower insurance premiums, cell phone bills, streaming services, and other monthly bills. All of these things add up, and the money you save could be put to better use in your retirement savings.

Build Your Emergency Fund

You should have an emergency fund of at least three to six months' worth of living expenses. That way, if you lose your job or suffer some other financial setback, you won't have to go into further debt or borrow money to make ends meet.

So how do you save for this fund? The easiest way is to set up automatic transfers from your checking account into a dedicated savings account every month. You can also use apps that round up purchases made with linked credit cards and then transfer those pennies into designated savings accounts. Whatever method you choose, put it on autopilot, so you don't have to think about it and won't miss the money as it diverts into savings.

Pay Down Debt

Paying off your debts gives you more options for using your money — for example, building an emergency fund or diversifying your investment portfolio. But do you know which debts you should prioritize? Typically, you will want to pay off the debts with the highest interest rates first and move on to the debt with the next-highest interest rate. Credit cards tend to carry the highest interest rates and should be a top priority in terms of paying off debt. From there, you can work toward paying off your mortgage, medical debt, and any other debts with lower interest rates.

Make Financial Resolutions a Priority

There’s no question that pre-retirement is a challenging time. Between the uncertainty of the future and the pressure to save, it can be hard to know where to start. But if you’re going to meet your retirement goals, it will take some serious financial planning and discipline. For more help prioritizing your financial resolutions for your specific situation, get in touch with our experienced advisors at IM Wealth Partners today.