Making and Keeping Financial Resolutions

What you might do in the months ahead

Brought to you by the MEMBERS Financial Services Program* located at SLFCU

How will your money habits change in 2016? What decisions or behaviors might help your personal finances, your retirement prospects, or your net worth?

Each year presents a clean slate, so as one year ebbs into another, it is natural to think about what you might do in the 12 months ahead.

Financially speaking, what New Year’s resolutions did you make (or should you have made) for 2016 – and what can you do to stick by them as 2016 unfolds?

Strive to maximize your retirement plan contributions. The 2016 limit on IRA contributions is $5,500 – or $6,500 if you will be 50 or older this year. Contribution limits are set at $18,000 for 401(k)s, 403(b)s, and most 457 plans; if you will be 50 or older in 2016, you can make an additional catch-up contribution of up to $6,000 to those accounts.¹

If you want to retire in 2016, be mindful of the end of “file and suspend.” File and suspend increases the Social Security claiming options for many married couples by allowing them to take advantage of spousal benefits and delayed retirement credits simultaneously. Social Security is closing the door on the file-and-suspend claiming strategy that married couples have used to optimize their Social Security benefits. If you are married and you will be at least 66 years old by April 30, 2016, you and your spouse still have a chance to use this strategy. Starting May 1, that chance disappears forever for all married couples. (It will still be permitted for individuals.)^2,3

Similarly, the opportunity to file a restricted application for spousal benefits has also ended. This was another tactic retirees employed in pursuit of higher lifetime Social Security income.²

Can you reduce your debt? Look at your debts, one by one. You may be able to renegotiate the terms of loans and interest rates with lenders and credit card providers. See if you can cut down the number of debts you have – either attack the one with the highest interest rate first or the smallest balance first, then repeat with the remaining debts.

Rebalance your portfolio. If you have rebalanced recently, great. Many investors go years without rebalancing, which can be problematic if you own too much in a declining sector.

Solidify some retirement variables. Accumulating assets for retirement is great; doing so with a planned retirement age and an estimated retirement budget is even better. The older you get, the less hazy those variables start to become. See if you can define the “when” of retirement this year – that may make the “how” and “how much” clearer as well.

Solidify college planning, too. If your child is in his or her teens, get a ballpark figure on the cost of attending local and out-of-state colleges. Even better, inquire about their financial aid packages and any relevant scholarships and grants. If you started saving for college, you can work with those numbers to determine how your savings need to grow in the next few years.

How do you keep New Year’s resolutions from faltering? Often, New Year’s resolutions fail because there is only an end in mind – a clear goal, but no concrete steps toward realizing it.

So, if your aim is to save $20,000 toward retirement this year, map out the month-by-month contribution to your retirement account(s) that will help you do it. The MEMBERS Financial Services Program* located at SLFCU can help you examine your cash flow week-to-week and month-to-month and suggest strategies for keeping track of your saving effort as well as other aspects of your finances.

It can also help to share your financial resolutions with loved ones or close friends. They may decide to adopt them, but even if they don’t, sharing your resolution could increase your commitment. A Dominican University of California study found that when people set near-term goals and kept those goals private, they achieved them about 35% of the time. But when they informed friends about them and shared weekly progress updates, the achievement rate surpassed 70%.⁴

Lastly, you may want to automate more of your financial life. If you have not set up monthly transfers to a retirement or investment account, 2016 can be the year this happens.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

*Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA /SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. 01052016-WR-1504

Citations.
1 - money.usnews.com/money/retirement/articles/2015/10/26/how-401-k-s-and-iras-will-and-wont-change-in-2016 [10/26/15]
2 - money.usnews.com/money/retirement/articles/2015/12/04/say-goodbye-to-the-social-security-file-and-suspend-strategy [12/4/15]
3 - tinyurl.com/p3exq5s [12/18/15]
4 - forbes.com/sites/bethbraverman/2015/12/29/4-tricks-to-get-your-new-years-resolutions-to-actually-stick-this-year/print/ [12/29/15]