Don’t Forget These 4 Financial Considerations for the Year Ahead | Millennium Trust Company

Don’t Forget These 4 Financial Considerations for the Year Ahead

February 24, 2020
By Gary Anetsberger

Now that we are a couple months into 2020, we’ve had time to set goals for the year and properly reflect on the one we left behind. It’s important to make sure the financial goals you set and the steps to get there make sense for you and that you don’t forget any of your options to maximize your savings.  

I’ve spent most of my career in financial services, and most of the last 20 years with Millennium Trust, where I have seen firsthand how the needs of financial advisors, financial institutions, businesses and individual investors have changed. Defined benefit plans have continued to shrink, cost of living has risen and increased lifespans have changed the way we view retirement – and saving, in general.

In addition to re-assessing your budget in the New Year, make sure you don’t miss these additional considerations that can help you reach your financial goals.

Don’t underestimate the importance of emergency savings.

It’s been reported that as much as 40% of Americans could not cover a $400 emergency expense if needed. Emergency funds can vary significantly depending on lifestyle, but a good rule of thumb is to have at least three to six months’ worth of expenses covered in the event of a job loss or other unexpected situation.

If you’re focused on your current expenses or saving up for a significant purchase, an emergency fund can often be pushed to the backburner – but you will thank yourself later should an unexpected situation arise.

Consider investing in individualized retirement plans.

Savings vehicles, such as traditional and Roth IRAs, can be used to supplement the retirement plan you may have at work. For people who don’t have access to an employer-sponsored plan, this is even more important. Traditional and Roth IRAs offer many of the same investment options as 401(k) plans – such as ETFs, mutual funds and target-date funds – and they offer different tax benefits.

Also, consider setting up and contributing to a Roth IRA on behalf of an adult child to help them start saving for their own retirement.

Assess your investment strategy.

Have you assessed your overall investment strategy?

Are you currently investing in stocks, bonds or mutual funds? Are you seeing the returns you would like to see? Have you considered alternative investments, such as real estate or private equity? Factors such as risk tolerance, time horizon and interest rates can all impact your investment goals and decisions. Consult a financial adviser to find out what might work for you in 2020 if you have not already.

Don’t miss out on free money.

According to a May 2015 report, “Missing Out: How Much Employer 401(k) Matching Contributions Do Employees Leave on the Table?”, of the 4.4 million retirement plan participants surveyed, one in four were not taking advantage of full company match.

Though it may sound simple, taking advantage of the tools and resources you have access to can be overlooked. If you work for a company with a 401(k) plan, chances are they will match the contributions you make up to a certain level; foregoing participation can often lead to “free money” being left on the table.

Outside of 401(k) plans, some smaller companies offer workplace savings programs, such as SEP, SIMPLE and Payroll Deducted IRAs. These plans operate in a similar fashion to 401(k) plans but offer more flexibility and lower costs for small employers.

If you work for such a company and there is no retirement savings plan, talk to the business owner. They might not be aware that there are plans available that offer similar benefits to a 401(k) with less cost and administrative complexity.

Alternatively, if you work for a large publicly traded company, you may have access to an employee stock purchase plan (or ESPP). These plans offer a great way for all employees to buy company stock – often at a discount.

Wherever your plans for the year ahead take you, it’s important to keep your financial goals in focus and feel empowered in making the decisions to achieve them.  

To learn more about saving and investing topics, visit our Knowledge Center.

The material in this blog is presented for informational purposes only. Millennium Trust Company performs the duties of a directed custodian, and as such does not sell investments or provide investment, legal or tax advice.

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