Younger adults are more likely to make New Year’s resolutions, according to the Pew Research Center, but that doesn’t mean retirees should kick them out. Retirement is one of the best times to review your long-term money habits, reset priorities, and create a plan that supports the retirement lifestyle you want.
To help you out, here are the top financial New Year’s resolutions that money experts say actually work for retirees.
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“The key to financial resolutions is to budget and budget realistically,” said Robert R. Johnson, Ph.D., Chartered Financial Analyst (CFA), Alternative Investment Analyst (CAIA) and professor of finance at Creighton University. “Specifically, you shouldn’t just budget and track spending, you should budget for savings.”
According to Johnson, if you want to make savings a priority, it shouldn’t be what’s left over. “It should be a line item in your budget. You don’t successfully build your wealth by simply taking what’s left after all your expenses,” he said. “We achieve what we prioritize. We prioritize savings and invest those savings.”
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But don’t forget to take into account your personal preferences and values. Johnson noted that you shouldn’t feel guilty about spending money that others might consider frivolous.
“For example, that daily latte purchase can bring you a lot of happiness — what economists call utility,” he added. “The key is to budget to maximize your own unique preferences and not those of others. We certainly shouldn’t cut out those things that truly bring us happiness.”
One financial resolution Echo Wang, founder of accounting services company EpicBooks, likes to encourage retirees to do is kick a habit. Not because it’s bad, but because it opens money.
“I say this because you don’t have to work for money, you don’t have to budget or rush. You stop draining it,” Wang explained.
While these little habits may feel harmless, they can add up. “A package here, a drink there, wandering around the shops when you’re bored,” Wang said. “But when we put them together, it’s one of the easiest ways to give your finances some much-needed breathing room.”
Wang also mentioned that there is no need to give up everything. “Just pick one vice. The thing that seems easiest to cut by about 20% to 30%. That small change tends to free up more money than any strict budgeting rule,” she explained.