4 Steps to Getting Your Financial House in Order During the Holidays

4 steps to financial house order holidays

The holidays are approaching, and everyone is stepping into high gear. From Thanksgiving dinners and seasonal gift shopping to family get-togethers, these are busy but joy-filled times. Aside from the festivity, fellowship, and merriment, though, it can also be financially stressful for many households.

The holiday season brings more pressure to spend, and this can put strain on retirees, many of whom live on a fixed income. For lots of Americans, there’s also the issue of personal debt. Having the pressure of growing debt loads, many people feel the impact of debt on their retirement goals, not to mention other objectives. And excessive holiday spending can be partly to blame. A survey by NerdWallet found that 24% of shoppers overspent last year, while 27% made no budget at all.

The good news is with the right steps, financial wellness is within reach. If you are in your 50s or 60s, it’s prudent to start taking steps to set goals, plan for the future, avoid financial missteps, and make changes so your money works for you.

Here are some steps to get your financial house in order for the year-end and for greater financial confidence in the future.

Steps toward Financial Wellness

1. Control spending during the holidays. Sure, it’s the season of gift giving, but excessive spending can put a dent in household income. According to the National Retail Federation, people plan to spend an average of $967.13 – a 3.4% bump from last year. And when it comes to household spending, retirees sometimes can rank near the top. In the survey by NerdWallet, 63% of baby boomers admitted to using debt to finance spending in 2016.

In another study by AARP, 25% of grandparents said they spent over $1,000 on their grandchildren. Overall, 95% said their spending was for holiday gifts. Travel is also a high-expense item for retirees. Merrill Lynch found that nearly 1 in 10 retired households (7%-8%) spend 25% of their annual income on traveling. 

While budgeting and planning can promote spending control, they may only go so far. Personal finance experts point to a spending ceiling as a helpful stopgap to hold yourself accountable. With that said, as seasonal discounts and savings deals abound, people may be tempted to tap retirement accounts for additional reserves.

If you are still in the process of saving for retirement -- or even behind in savings -- it's crucial to leave your money intact. Not only may you be looking at a bigger tax bill for any account withdrawals, but you will be spending future income -- not to mention more dollars that would come from your money growing.

2. Prepare for a year-end financial review. Just like with personal health, financial wellness needs an annual lookover. Conducting a financial review will let you evaluate your goals, see your progress, and determine adjustments to be made. For people nearing retirement, this is an excellent time to see if your financial plan is optimized for your retirement planning objectives.

Schedule some time with your financial professional and see how things have progressed from your prior review. As you plan for the future, you may want to consider the following points:

  • Do you have enough money saved to maintain your income needs in retirement?
  • What are your goals for the upcoming year, and what income will you need to attain them?
  • Should you not be retired quite yet, what do you expect your income needs in retirement will be?
  • If you don't have enough saved, what can you do to reach that milestone?
  • Is the asset allocation strategy you have appropriate for this stage of your life? 
  • Should you be close to retirement, do you have a good balance of risk-bearing assets versus ones that protect your principal?
  • How is your portfolio performing, and what are you paying in fees? 
  • What will your tax burden look like as you start drawing on retirement accounts and other sources for income?
  • Is your current financial plan preparing you for future retirement risks like health costs, long-term care costs, inflation, and others?
  • Are there strategies you can do now to alleviate your current tax burden and keep more money?
  • Might there be any attitudes or behaviors toward your money that you should change for greater financial wellness?
  • What are some ways you can lessen your debt load, if you have any?

3. Get on the same page with your partner about both of your personal retirement expectations. When it comes to money and retirement, many couples have vastly different ideas on how and where dollars should be spent. This is just as true of money matters before retirement. Even partners who have been together for decades may have completely different goals and visions.

So, you might want to consider setting some time aside for money and retirement conversations. Talking while enjoying a nice dinner out or while taking a long trip can be a solid way to defuse potential tensions.

Here are some money and lifestyle questions to think over. What are your spending philosophies, and how might they affect your future? What other goals besides retirement are you prioritizing, like helping children with college or giving financial help to parents? How do those priorities play into your overall plan? What sort of vision do you both have for your future lifestyle? Will you live in the same place, or do you want to consider downsizing your home? How is your health, and what will you do to maintain it?

After having these conversations, it's off to the races. You can start planning for how you will meet these goals -- together.

4. Take action! It's one thing to lay out a vision and plan for it. It's another to actually take action toward achieving it. While it may seem counterintuitive, several Americans put off this step as late as years down the line -- and it can be quite impactful. For example:

  • Just 11% of people have a written financial plan for retirement, the Employee Benefit Research Institute says.
  • People who are ages 56-61 have seen a 385% increase in their average debt load from those in 1998, according to MagnifyMoney.
  • Nearly 60% of Americans can't afford to pay for emergency expenses with savings, reports BankRate.
  • 1 in 5 Americans have no retirement savings, and 90% aren't confident in their retirement savings as life expectancies increase, says IALC.

The point is this -- now is an ideal time to take action. The sooner, the better. Numerous surveys show the positives of taking control of your money early, including more financial confidence, greater peace of mind in retirement, and better outcomes such as having more retirement money saved up. 

Final Thoughts

While the holidays are just one part of the year, they are an excellent time-frame to start shaping up for financial wellness -- now and in the future. As you plan for and take action with regard to your own finances, you may benefit from the guidance of a financial professional. Financial professionals stand ready to help you here at 

Use our "Find a Financial Professional" section to connect with someone directly. If you need a personal referral, call us at 877.476.9723.

Author: Ian

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