Why it’s Essential to Set Financial Goals

If you want to be financially successful, it’s essential for you to set money-related goals at the beginning of your journey. Once you’ve done this, you’ll be able to chart your progress along the way and see whether any adjustments may be needed along the way. 

 

Goals Enable you to Set Up a Realistic Financial Plan

Determining what your financial goals are will give you the opportunity to compile a realistic plan to help achieve it. Simply receiving your paycheck and paying recurring bills without realizing where all of your money is going will not allow you to make the most of your finances over time. For instance, if you would like to retire with a balance of $1 million, you’ll need to know how much will have to be saved and/or invested each month and how long you still have to get to that amount.

 

You’ll be Able to Track your Progress

Being able to track your progress will not only allow you to see if you’ll be able to realistically achieve your financial goals; if one of your goals is to eliminate all of your consumer debt within a specified timeframe, seeing the amount of money owing shrink each month will be an excellent motivator over time as well. 

 

Goals Help Keep you Focused

Another reason why it’s essential to set financial goals is that they help keep you focused. In other words, it will make it easier for you to ‘keep your mind on the prize’ so to speak. 

Regardless of whether you’re saving to buy a car, house or even an overseas vacation, it’s a good idea to take pictures of the items you’re saving for and place them in a spot where they can be seen regularly. This has been proven to be one of the best motivators around that will help prevent you from overspending on impulse purchases.

 

Enjoy a Sense of Achievement

Although it may seem like it’s taking forever to achieve some of your larger financial goals, there’s little else that feels as good as that sense of achievement you experience once one has been reached. 

Once you’ve achieved your first financial goal, you’ll be even keener to see how quickly you can reach any others you’ve set. Consider giving yourself a small reward for each goal you achieve – maybe treat yourself to a coffee that you don’t usually purchase, for instance. 

 

Enjoy Peace of Mind

Once you start achieving your financial goals, you’ll be rewarded in another way that you may not even realize initially – being able to enjoy peace of mind in knowing that your financial future will be more secure than it was before. 

If you’re unsure of how to go about setting realistic financial goals, you may need to enlist the help of an experienced financial adviser. They will be able to let you know whether you’ll need to reduce current expenses or increase your income in order to achieve your financial goals. Contact our team today to learn more about planning ahead for a financially secure future. 

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When does it make Financial Sense to Dig into your 401(k)?

Your 401(k) allows you to set aside a predetermined amount of money each month that can then be used to live on after you’ve retired. Although you do have the option to dig into these funds before you reach retirement age, it’s usually not recommended that you do this. However, there may be one instance where it would make sense for you to do this. 

 

When it’s Possible to Repay it Quickly

In most cases, the only time you should ever consider accessing the funds in your 401(k) account early is if you’re in a very tight financial situation and you know that it will be able to be repaid within a few months at the most. 

While you will still lose out on potential interest that could be earned on the amount you’ve withdrawn, you won’t be jeopardizing your final payout amount as much as if you took longer than a few months to repay your loan. For instance, if you’re faced with sudden unexpected medical expenses that you don’t have the money to pay for or your home is in danger of being foreclosed upon, but you’re assured of obtaining additional funds within the next month or two that will cover the full cost of the loan you’ve taken out, it may be a good idea to borrow against your 401(k).

 

A Serious Disadvantage

While you may plan to rely extensively on social security payouts each month after retiring, more and more information is being revealed stating that these amounts will not be nearly enough for seniors to live on – especially if they suffer from serious health conditions or you live in a high cost of living area. 

If you borrow funds from your 401(k), you lose out more than once. The first time is when you miss out on the potential interest you could have earned on that loan amount and the second will be because the amount of money you’ll have left to live on after retiring will be reduced quite substantially. 

 

Start Preparing for Retirement Now

If you’re still in your 20s, you may think that there is still a lot of time left to start planning for your retirement. However, this is not the case. The sooner you start making contributions to your 401(k) in your 20s, you’ll be able to contribute smaller amounts each month than if you wait to start making payments once you reach your 30s. Over time, this could amount to a difference of $100,000 or more that you’ll have to live on during your retirement years. 

Many employers still offer to match employees’ 401(k) contributions up to predetermined amounts or percentages, which is why it makes even more sense to start contributing to this account as soon as possible. If you are seeking further financial advice regarding how to prepare for retirement, get in touch with our team today. We look forward to working with you and helping you plan for your future. 

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Dealing with Unexpected Medical Costs during Retirement

While you should be able to relax and enjoy your retirement years as much as possible, a possibility always exists that could result in you having to cover the cost of large and unexpected medical bills. If you’re unfortunate enough to land in this financial position, there are some steps you can take to try and reduce the effect that it will have on your retirement funds as much as possible. 

 

Never Rely Entirely on Medicare

Several older individuals are under the impression that Medicare will be able to handle all of their health-related costs after they reach the age of 65. However, this doesn’t always work according to plan, which is why it’s important to think about purchasing a Medigap policy from a private insurer and/or a Part D prescription medicine plan. 

Keep in mind that it will only be possible to purchase Medigap cover if you already have Medicare Part A (hospital services) and Medicare Part B (standard doctor services) sorted out. This alone will help you cover as many potential medical emergencies as possible that could occur after you’ve retired. 

 

Find out if there are any Alternative Options

If you’ve had the same prescription for more than a few years, you may have just been having it refilled – often without thinking about the out of pocket costs it incurs. However, once you’re no longer working, you’ll need to do everything you can to keep your out of pocket medical expenses as affordable as possible. One of the easiest ways to do this is to inquire about the possibility of generic medications

Using generic medications can help reduce your monthly prescription expenses by as much as 75%. Another way that you could reduce these costs is by changing to preferred healthcare providers or asking whether any prescription discount cards are available for your medicines. 

 

Find out about Potential Assistance Programs

When it comes to being able to obtain your prescription medicines at affordable prices each month during retirement, you should never be too shy or afraid to inquire about the possibility of there being any assistance available that could help shoulder the cost. 

Several organizations are available that can provide you with assistance if you’re struggling to cover the cost of your medications. For instance, if you require new prescription glasses, associations such as the Rotarians will often be able to assist you – along with providing an eye exam. The AARP will also be able to provide you with a host of information in this regard as well.

When it comes to keeping your medical expenses as low as possible during your golden years, the saying, “prevention is better than cure,” certainly applies. As such, you should do your part as much as possible by remaining active and consuming a healthy diet. This will help ensure that you’re able to make the most of these precious years without having to worry about trying to cover a multitude of health-related expenses. 

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