We pass into the next decade of the 2000s in a few days, which is an appropriate time to pause and evaluate where we’re at versus where we want to be. Normally this self-reflection manifests itself in fitness and health goals, both of which are very important. But this year, I challenge you to take that same mentality and apply it to your personal and practice finances.
In a sense, financial goals are almost easier to reach because so many of them can be put on autopilot (saving for retirement), are one-and-done (getting insurance properly structured) and have a pretty clear cut path to success (pay off debt, increase margins). Health goals are laden with the reliance on self discipline and self control, are a daily or weekly effort, and results vary person to person.
Like fitness goals, there’s always room for improvement in your financial life. My challenge to you is to pick one or two easy tweaks to shift your financial path to where you want it to go. Start contributing to your Simple, and if you already are, work toward maxing out the maximum allowable deferral. If you’re doing that and over age 50, begin adding catch up contributions of $3,000/year. Fully funding that? See if you can squeeze a little extra out of your cash flow and set aside an investment account in addition to your retirement accounts. And if you’re really serious about your financial resolutions, talk to me about whether a Personal Wealth Action Plan can help you meet your goals.
This topic is timely given the SECURE Act, legislation passed last week that marks the largest change to pension and retirement plans since 2006. Of note, IRA owners can now defer taking their RMDs (required minimum distributions) until age 72 instead of age 70. You can also contribute to IRAs longer than previously allowed. And For SIMPLE IRA plans, there is a tax credit available when you elect automatic enrollment. In a nutshell, the government is acknowledging that the average American is working and saving longer to get to retirement.
Don’t be average. Set your resolution this year to take the next step in your financial future. Next year’s can be another small step. All those small steps added together can mean big strides toward a comfortable and secure retirement.
FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY.
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