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The new year brings reflection and reassessment. Although a big list of New Year’s resolutions can be difficult to keep, it is worthwhile making and keeping just one solid change each year.
Here are five changes that will move you toward a better future. Had you had acted on even one of these resolutions 10 years ago, you’d probably be in a better place. Make one or all of these moves now, and thank yourself heartily a decade hence!
1. Boost your retirement savings 1 percent a year
Can you picture yourself saving 20 or 30 percent of your salary toward retirement? It sounds radical.
Yet, when you consider our growing lifespans and the potential shrinkage (or even loss) of Social Security in years to come, the only guarantee against old-age poverty might be to save about 30 percent of your earnings and invest it intelligently.
Ten years ago, if you’d started adding a measly 1 percent a year to your retirement savings — just $25 more out of each $2,500 paycheck — today your contribution would be 10 percent higher. If you were saving 10 percent at the beginning of 2007, you’d be at 20 percent now. If you were deducting 15 percent toward retirement, you’d be saving 25 percent by now, solidifying a safe future in retirement or maybe even a chance at early retirement.
Here’s how to get started:
- Divert money before you see it: Sign up for automatic payroll deductions so the money never reaches your checking account. This will derail any temptation to spend the money. If your employer doesn’t offer automatic deductions, your bank will let you automatically divert a set amount into savings monthly. If not, find a new bank.
- Automate your increases: Some workplace retirement plans let you choose to automatically bump up your savings each year, which makes the dent in your paycheck scarcely noticeable. If you don’t have this feature at work, muster your resolve and do it yourself, raising your retirement contribution by 1 percent each January.
- Run the numbers: Say you earn $80,000 a year. At a 10 percent annual savings rate, you put $8,000 before taxes into a 401(k) each year. If a decade ago, you’d bumped your savings rate by a half-percent a year, you’d now be at 15 percent — and putting away $12,000 a year. If you’d pushed your rate up by 1 percent, you’d be saving $16,000 a year now, doubling your contribution in 10 years. Experiment with your own numbers using several online retirement calculators. These are not precision instruments, so try several to get a rough idea.
If you’re looking for more ideas, consider the following:
- Money Talks News founder Stacy Johnson has a simple formula for investing retirement savings.
- If you’re stressing about having enough to retire, read “6 Ways to Ensure Enough Money For Retirement“
- And if you are “Behind on Retirement Savings? Here’s What to Do“
2. Drop your defenses
Maybe you needed weapons when you were younger. Life is rough, after all, and many kids get kicked around in families and by peers while they’re too young to escape. So, we’ll give you that.
But defensiveness – the impulse to meet every challenge with an attack – robs us of the chance to hear information we need. It cheats us of the chance to hear what friends, colleagues and loved ones want from us.
That, in turn, robs us of chances to grow, to succeed, and to make more and deeper connections. In other words, defenses protect us from life. If you’d been listening 10 years ago, your life might be much richer today.
Here’s how to do it:
When someone asks you to listen, just do it. No arguing, no counterattacking. You don’t have to agree or respond. Just say you’ll think it over. You’ve got your own grievances, no doubt. Save them for later, for when it’s your turn to be heard.