January means goals.
Specifically, it means new goals that are set in the hopes of a happier, healthier and more prosperous year than the last. If you're still thinking about possible goals for this year, consider trying to achieve the following in 2016.
Save more. We're not insensitive to the fact that it's not always feasible for everyone to put more away in savings due to their budget constraints. But for many people, the opportunity does exist to increase the total amount you're saving. Even if you increase your savings rate by just 1 percent every year, that total can really add up, especially for younger savers.
For example, imagine someone who is age 40, earns $50,000, contributes 10 percent of their salary to a 401(k) and expects a 5 percent average annual return rate. After 25 years, that person would have about $160,000 in savings with no annual contribution increase. If, however, this hypothetical person increases their savings rate by 1 percent annually, they'd have $340,000 at age 65-more than double than what they would have had with no annual increase!
Begin thinking about multiple revenue streams. From a zero percent cost-of-living adjustment (COLA) this year to major reforms made to popular claiming strategies, it's clearer than ever that relying on one source of income-in this case Social Security-can be a treacherous decision. Instead, create a plan that generates income from multiple sources. When working with our clients, we refer to this as the "Your Money" Matrix, a tool that allocates their assets based on time horizon (when they'll need to spend those assets) and their tax treatment. This approach may help provide better security when unexpected public policy changes or market volatility materialize.
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Set up a comprehensive financial plan. We're firm believers that when people have a written plan, they're more likely to be successful when it comes to reaching their long-term goals. And while working with an adviser to construct a comprehensive financial plan may not be free, cost is only a factor in the absence of value. Data has shown that those who work with a financial adviser tend to do better than those who do it alone. One such study from Vanguard found that
advisers that provide comprehensive advice can add up to 3 percent to their clients' bottom lines in excess of the fees paid.
At the end of the day, when deciding which goals to strive for this year, it's a good idea to choose objectives that reflect your core values. Picking goals that are truly important to you will help you stay committed and will make it that much more rewarding when you finally reach those goals you've worked so hard to reach.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at
