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Ameriprise Financial Articles
Setting and Achieving Financial Goals in the New Year
By: Carrie McPherson
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If the start of 2023 has you inspired to take on a healthier approach to your finances, you may be wondering how to do so and where to get started.
Should you focus on reining in your spending habits? Earning more? Investing wisely? All of the above? Here are some practical suggestions to help you improve your financial outlook this year and in the years ahead.
Envision your future. Financial goal setting involves brainstorming. Take the time to consider what you want your financial future to look like and what it will take to get you there. Your goals will flow from the life you want to create for yourself.
Get specific. It’s difficult to act on goals that are too broad or vague. You need to know dollar amounts. For example, if you hope to replace an older car, zero in on the price tag of your next vehicle. Or if you want to purchase a first (or second) home, identify how much you need for a down payment and what monthly payments you can afford. With these specifics in hand, you can calculate how much you need to save each month to achieve a given goal.
Prioritize. Choose a manageable number of goals to work toward. Better to start small and build on your successes. You can sort goals into lists of short-term attainable goals, five-year goals, and long-term stretch goals. The sequence of goal attainment often falls into place naturally. For example, common sense suggests building up your emergency fund and paying down high-interest debt before contributing to a college education fund.
Attach timelines. Goal setting is meaningless without milestones and target dates. Set timelines that are reasonable and achievable.
Document your goals. You’ll want a visual reminder of your goals to make them part of your routine. Create a spreadsheet, put pen to paper or – ideally – work with a financial advisor who can help you map out your goals and document your progress against them. Set a reminder on your phone to review your goals on a daily, weekly or monthly basis. Doing so will keep you focused on accountable for achieving them.
Pair goals with your budget. Realistic financial goals live within a budget. Ideally, your budget will provide guidelines and guardrails for earning, spending, and saving—the key to successful financial goal setting. Retrain your brain. Goal setting may seem like deprivation if you view it only as cutting back on spending. Reframe your thinking to overcome mental obstacles. See the rewards of putting your time and energy toward actions that move your financial life forward. You might give yourself a psychological boost by doing something nice for yourself during or after goal setting activities. Over time, your mind will connect the two activities so that you find pleasure in both.
Be flexible. Goals are not static. If something changes in your circumstances, you can adjust your goals. If you need to reduce your investment budget while you pay for a much-needed home repair, that’s life. Don’t let a setback derail you. Simply adjust and move on.
Prepare for success. When you make the effort to set attainable financial goals, you’re halfway there. Once you start tackling each of your financial goals, you’ll be inspired to do more. Feelings of financial uncertainty will fade as you take your future into your own hands.
Get expert guidance. An experienced financial advisor can help you with financial goal setting. When it comes to applying strategies to save and invest for your future, their advice is priceless.
Carrie A. McPherson, CRPS®, CDFA®, ChSNC® is a Financial Advisor and Certified Divorce Financial Analyst with BeaconPoint Wealth Advisors, a financial advisory practice of Ameriprise Financial Services, Inc. in Providence, RI. She specializes in fee based financial planning and asset management strategies and has been in practice for 13 years.
Please contact her at: www.ameripriseadvisors.com/team/beacon-point-wealth-advisors or (401) 824-2557 1 Citizens Plaza Ste 610 Providence, RI 02903
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.
Will You Spend Your Retirement Savings or Leave It Behind?
By Edward Pontarelli Jr.
A key financial question for retirees is what to do with their hard-earned retirement savings. For example, some may find it more fulfilling to provide a college fund for grandchildren rather than purchase a second home for themselves. The opposite can also be true, and that’s okay.
In my experience working with retirees, I’ve found it’s critically important to identify what each person’s goals are for their nest egg. Do they want to spend down their assets pursuing activities that bring them joy -- or would it be more fulfilling to leave an inheritance to loved ones? If you find yourself wrestling with the same question, read on for some considerations that can help determine the right approach for you.
The rationale for spending down your wealth
On one hand, you may enter retirement with the primary goal of living the lifestyle you’ve worked so hard to earn. Pursuing a hobby, traveling, purchasing a vacation home or fulfilling another retirement dream may be exactly what you envisioned for your later years.
If you fall into this category, keep in mind that these plans likely come at a price. Given the realities of longer life expectancies, it’s crucial for retirees to be prepared for a retirement that could last for several decades. This means your savings will need to cover routine expenses, which are likely to rise due to inflation, as well as the potential for health and long-term care services. Ensure you allocate enough dollars for these purposes before deciding whether or how much money to spend down or leave behind.
The rationale for leaving a legacy
On the other hand, if your primary retirement goal is to leave a legacy to your loved ones, it’s important to start nailing down the details of inheritance plans early. As you do, keep in mind that your legacy includes what you plan to give as an inheritance upon your death, in addition to what you give and value today.
Perhaps you are eager to give your children and grandchildren a helping hand. Your generosity could make a significant difference in helping them reach key financial milestones, such as achieving a college degree, purchasing a home or paying off a mortgage.
Or, maybe you prefer to contribute funds to a charity, foundation, or alma mater that aligns with your values. Think about donating to causes that are most important to you or have made a significant impact on your life.
Whether you give to your loved ones, philanthropic causes or both, create or update an estate plan to document your wishes. Your plan should include written instructions (e.g., a will or trust) and up-to-date beneficiary designations on all your accounts.
Finding a happy medium
Spending your assets or leaving an inheritance are both great options. Yet many of my clients hope to accomplish both. If this applies to you, too, know it’s possible to find a middle ground. After all, each person’s retirement dream is unique, so your financial plan to accomplish it should be, too.
As you weigh your options on how to allocate your savings, it may be important to you to talk with your spouse or partner about what brings each of you the most joy. Once you’re aligned, communicate your intentions with family. Estate planning can be a tough topic to raise with loved ones, no matter how much or little money you plan to pass down. But having the conversation can alleviate tension down the road while giving your children confidence about what to expect.
If you’d like a second opinion on how to achieve your retirement dream, consult a financial advisor and estate attorney. These professionals can offer advice and encouragement, helping you to find your own happy medium between spending and providing an inheritance with your assets.
