Steps to take to achieve financial goals for 2021- by Syed Nishat

What are the steps to take to achieve financial goals for 2021? – by Syed Nishat

Keeping track of your financial goal may look like a daunting task. However, breaking them down into simple steps allows for manageable goals that will get an investor into a good position for a financially secure future.

Automatic enrollment in an employer sponsored plan: There may be several different retirement plan options open to you. If your employer offers a retirement savings plan, definitely enroll and contribute as much as you can. Learn the details of your plan so you can take advantage of maximizing company matches, understand how long you’ll need to stay in the plan to be able to get all of the money, and use automatic deductions from your paycheck to simplify the process. Overall, you’ll lower your taxes, and the compound interest in your plan will make your investments really give back over time. Also, most employer matches up to 4% to 6% of your salary if you contribute in a retirement plan. For 2021, you can defer up to $19,500 plus $6,500 if you are over the age of 50 as a catch up in a 401k Plan.

Contribute to your own Retirement Account: You can also save with personal accounts. The annual IRA contribution maximum amount is $6000, and if you’re older, you can contribute $7000 annually as a catch-up contribution. In the case that you have already hit the maximum on your 401k plan, a Backdoor Roth IRA may be the best option for you. An amount contributed after tax to your IRA account can then immediately be converted into a Roth IRA, where it will then grow and can be withdrawn tax free.

Keep a Budget: To help you reach a target financial goal, it’s important to look at your living expenses and keep them in proportion. For example, the recommended percentage of housing expenses is 20-25%, so having a large mortgage that is a greater proportion is inadvisable. A basic budget recommendation looks like this:

1. House                   :20%
2. Savings                 :20%
3. Food                      :15%
4. Transportation   :10%
5. Health                  :10%
6. Utilities/ Misc.   :15%
7. Charity                 :10%

Use APPS: Keeping track of expenses is vital; to make it simple, use an app like Mint or Packet Guard.

Start Saving Early: When it comes to saving money, the earlier you get saving the better. This is largely because of compounding and the increased effectiveness it has the earlier you start your retirement investing plan. The longer your interest is earning interest, the quicker your savings will grow. Getting this going early means more flexibility later in life, because you have already created a good foundation should something interrupt your savings program.

Rebalance and Diversify Your Investment: To give your nest egg the greatest amount of stability, it’s best not to put all your investment power into one equity or into all speculative investments. Diversification means spreading around the potential as well as the risk, and this strategy is a form of protection for your retirement savings.

Create your Will and Trust: We all know how fragile life is especially during this Pandemic have shown, life is uncertain. Having A properly drafted estate planning gives a certainty and peace of mind that the loved one will be taken care of and the assets will be in good hand. Since the Will is revocable while you are living, you can change it as your situation changes.

Focus on Health: There’s a well-known proverb that reminds us “Health is wealth.” Keep this in mind as you make your health a priority, though this doesn’t just mean maintaining a healthy lifestyle. Contributing to an FSA or HSA account to give yourself a cushion with a high-deductible insurance plan and really making use of it after age 65 are good plans. Also, planning ahead by seeking out long term care insurance while still in good health will mean you’ll be in a better position to pay for nursing care or other qualified expenses you may have as you age.

Learn about Social Security Benefits and Medicare Part B: Even with careful investment planning, most people still need the Social Security benefits they receive. However, holding off on claiming Social Security until a later age will mean a greater benefit to you and your family. Waiting also scores you delayed retirement credits which will give you an increase in benefits annually until you’re 70. Signing up for Medicare as soon as you’re eligible at age 65 is also essential. Medicare Part A is premium free and will cover hospitalization. Medicare Part B is actual medical insurance, and you’ll want to choose the plan that best suits your situation.

Pay off credit card debts: Latest statistic shows that almost 47% of American are using credit. Both Warren Buffet and Mark Cuban agree to paying off debts as soon as possible. As a personal experience, I have also used credit cards when I was a student and bought things that I could not afford and thought that I would be able to pay this off when I had more income. But very soon I was in $20,000 credit card debt with 15% interest rate as I was paying only the minimum balance. This story is common, and it is quite easy to get carried away to start using credit cards and spend more than you earn. Working with a financial advisor who can help you set up a budget and keep your emotions in check may help you making a sound financial planning decision.

Prepare for Uncertainty: While no one wants to think about the worst possible situation for the future, there’s no denying that the unexpected can and does happen. Planning now will mean you’re not caught unprepared later. Consider and discuss with your family those challenges that could arise, from serious illnesses to home repairs. What are the costs and how will we cover them? Who should be informed? What sort of care do we want? — these are some of the questions to make sure you have answers to for each issue.

Embrace a Passion (especially during retirement): What will you have once you’re no longer going to your 9-5? Time! When you retire, you’ll have time to pursue what you truly want to do. While spending all day watching sports on tv may sound enjoyable now, that would quickly lose its shine. Discovering and identifying your true passion or value in life early will help set you up to truly make the most of your retirement, whether that means volunteering in your community, gardening, pursuing music, or working in your faith. Obviously, you won’t do only one thing in retirement, but having a passion to guide you will let you really enjoy your retirement life.

Because there is much to consider when it comes to Financial Planning and  it is best to work with an experienced financial advisor when setting up a goal and who can act as a guide and give advice that best suit your circumstances