The Year 2015 is almost 2 weeks old, but it's never too late for a new year's resolution, particularly for something as important as retirement.
The Year 2015 is almost 2 weeks old, but it’s never too late for a new year’s resolution, particularly for something as important as retirement.
Katherine Roy, chief retirement strategist at J.P. Morgan Asset Management, advises clients to check in with their financial advisors at least once per year to ensure their retirement plans are on track.
In the spirit of the New Year, Roy and J.P. Morgan have published a list of “5 Resolutions for Your Retirement Plan.”
1. Know Where You Stand
This may sound obvious, but it can be all too easy to slip into a “what you don’t know can’t hurt you” mindset when it comes to retirement. That’s particularly true during down economic times, when the news is more likely to be discouraging. But Roy says “it’s really important to know where you stand” in your retirement savings, no matter how close or distant your retirement date.
2. 15 is the New 10
Roy says today’s workers need to plan to save 15% of their income each year for retirement. She suggests automatic paycheck deductions and participating in your employer-sponsored retirement plans. Roy says any matching funds from your employer can count toward your 15% goal.
3. How You Invest Matters
Roy cautions investors against being too conservative with their investment portfolios. “You can’t count on unrealistic investment returns to make up for saving too little,” she said, in a press release. “Maintaining a disciplined, balanced saving and investment strategy is critical.”
4. Prepare to Pay More for Healthcare in Retirement
This is one tip physicians probably understand better than most. Healthcare costs are rising faster than inflation, meaning it will be a force retirees will need to reckon with in their post-work years. The average 65-year-old currently spends about $4,000 per year out of pocket for healthcare, but Roy said that number is expected to grow to $10,000 per year in the coming years. Persons with high prescriptions costs can expect to pay even more.
5. Consider Delaying Social Security
Roy notes that delaying taking Social Security can mean increased benefits. For those 67 and older (or 66 and older for persons born between 1943 and 1954), delaying benefits by a year can result in an 8% per year increase in benefits up until age 70. If you can’t wait that long, Roy says at least don’t retire early.
“If you start taking benefits earlier than full retirement age, you’ll not only lock in reduced benefits for your lifetime, but benefits to your survivors could also be significantly reduced,” she said.
J.P. Morgan has put together a broader Guide to Retirement, which is available here.