It’s not hard to fall behind on your retirement savings, but it can be very difficult to get back on track. Everyday costs such as child care, home repairs, health care and more can limit your ability to save regularly for a long-term retirement goal.
With the new year here, it may be a good time to go back and reassess your savings plans to see if you’ve fallen behind on your retirement plan. After all, New Year’s is the time to make resolutions. Why not include retirement planning in your resolutions for 2017?
This is especially true if you experienced major life changes in 2016. Maybe your marital status changed. Perhaps you changed jobs, or your kids may have left the house. Below are a few major changes that might trigger the need for reviewing your retirement plan. If any of these sound familiar, it might be time to reassess your retirement plan and develop some resolutions for the coming year.
Your marital status changed.
Marriage can bring changes to not only your personal life, but also your financial picture. Now that you have a spouse, you might have the benefit of two retirement plans and two incomes. You might also have the burden of more debt or greater expenses.
Either way, your retirement plan now must include the needs of both people. You and your new spouse might have different ideas about what retirement looks like or even when you would like to retire. Take time to sit down and discuss retirement. If you have differing visions, it’s better to identify those differences as soon as possible so you can find common ground.
Getting divorced can also have a significant impact on your retirement plan. Your divorce may have affected your available resources. It also may have impacted your ability to save, especially if you were the lower-earning spouse. Take time this year to reassess your retirement planning and develop a new strategy.
You found a new job.
Job changes are exciting. They often mean better opportunities and more income. But they can also impact your retirement planning. For example, a higher income can mean more money available for savings, but it can also lead to higher spending and an enhanced lifestyle. A budget can help you stay on track and ensure that much of your increased income is being used to achieve your long-term goals.
It also might be wise to look into your company’s benefits. Chances are good that they’re different from your previous employer’s benefits. Does your new company offer a 401(k) match? If so, are you taking advantage of it? Does it offer disability income and life insurance? What about other retirement planning tools, like profit-sharing or deferred compensation? Review your benefits to make sure you’re maximizing opportunities.
The kids are gone.
It can be a good feeling to finally have your children out of the house and beginning their own lives. Their departure could also mean you have more disposable income. Now that you don’t have to worry about child expenses, you may want to look into ways to increase your savings rate.
You may want to consider making catch-up contributions to your IRA or 401(k). Individuals over the age of 50 are allowed to contribute more to their retirement plans than is typically allowed. For example, in 2016, those age 50 and older were allowed to contribute $6,500 to their IRA rather than the usual $5,500. In 401(k) plans in 2016, participants age 50 and older could contribute an extra $6,000, for a total maximum contribution of $24,000.1
Searching for a retirement planning strategy to fit your goals? Let’s start a conversation. Give us a call at Intelliplan Financial and discuss your goals with a financial planning professional today.
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