The Best Retirement Steps to Take in 2015


The promises we make to ourselves are usually the hardest to keep.

This time of year, we make them anyway.

New Year's resolutions might seem like a somewhat modern convention. They fit in well with our culture of constant self-improvement.

Yet the tradition of making promises at the dawn of a new year is almost as old as civilization. The Babylonians made promises to their gods and staged massive festivals. The Romans offered their promises to Janus, the god with two faces.

Medieval knights had a special form of New Year's resolution. They called it the "Peacock Vow." Despite the comical name, it was a deadly earnest profession of chivalry.

Knights would place their hands on a peacock (considered the noblest of birds) and re-dedicate themselves to the high ideals of chivalry.

Today, our promises are far more mundane. We want to become fit. We want to spend more time with loved ones. We want to improve our financial situation.

These goals don't have the high drama or romance of medieval knighthood, but they are no less important.

So today we're going to talk about a promise you should make immediately. It's not a promise to yourself. It's not a promise to anyone else, either. It's a promise to someone who isn't here, but who desperately needs your help.

I'm talking about your future self. The retirement age version of you.

It's easy to break a promise to yourself. After all, it's usually not public. You can rationalize it away, or just put it off until next year.

Yet it's your later self who pays the price for today's decisions.

So today we're going to be an advocate for that future you (feel free to thank us in 10 or 20 years).

Let's review a few steps you should resolve to take this year to secure your future.

Keep your plans in harmony with your position

In his famous novel "The Sun Also Rises," Ernest Hemingway describes bankruptcy as happening two ways -- "gradually, then suddenly."

That's also how many of our great life changes occur. We start out young, ambitious and aggressive. We focus like crazy on building a career or a business.

Before we realize it, we're married with children. It seems like no time has passed at all. Soon our children have children.

We realize it all happened two ways -- gradually, then suddenly.

Our investment strategy typically mirrors our circumstances. When we're young, we focus on growing as fast as possible. We throw caution to the wind. There's always time to recoup anything we lose.

As we age, we need to ensure our investments match our life's circumstances. Too often we neglect to review our retirement plan options. We put off adjusting our allocations. We fail to make necessary changes to our strategy.

The new year is the best time to sit down and closely examine the choices available in your retirement plan. It's a great time to take a hard look at the composition of your portfolio.

You need to ask yourself whether your investment strategy and retirement plans have kept pace with life's inevitable changes.

In this vein, it's also smart to consider boosting your contribution. In October the IRS announced a $500 increase in contribution limits for employees with a 401(k) or 403(b) plan. This cost of living increase also applies to those with 457 or Thrift Savings plans.

This means you may now contribute up to $18,000 this year.

Additionally, the catch-up contribution limit for those older than 50 has been raised $500 to $6,000 for those same plans.

If you can afford it, you should take advantage. If you can't afford it, you should think about trimming elsewhere.

Finally, the beginning of a new year is a time for taking stock. That means it's also a great time to calculate your current retirement readiness.

You can do it by examining your age, income, investments, retirement contributions, expected income, preferred retirement age etc. Or you can use one of the many freely available online calculators.

Either way, it provides a valuable snapshot of your current financial position.

By resolving to make the necessary financial adjustments this year, you can put yourself in the best position to reach your long-term goals.

It's important to remember that successful retirements also happen two ways.

Gradually, then suddenly.

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