Investor’s column: Some helpful tips for setting financial resolutions for the new year

There’s no doubt about it: Market gyrations of late have been unnerving for some investors.

And even though this one may be milder than most investors fear, we need to remember that bear markets are inevitable.

That’s why it’s important to be prepared for them.

As we make resolutions for the new year, especially considering recent market turmoil, it’s good to add financial resolutions to your goals for 2019.

A few suggestions:

1. Exercise your retirement forecast assumptions: Review the key assumptions in your retirement forecast.

Are your plans still on track, or will this market prevent you from pursuing your goals?

Very likely, minor adjustments made early (if needed) can still permit a successful retirement.

Remember, bear markets are temporary. Long-term, markets trend upward.

Revisit your long-term plan regularly, even if you are already retired. And if you don’t have a retirement forecast, find a financial planner to help you get one.

2. Get your cash flow plan in shape: If you are still working, review what you spend and look for ways to cut back so you can add to savings in the new year.

If you are retired, review income sources with your financial planner to determine how predictable they are regardless of market performance.

Good retirement cash flow plans derive “inflows” from consistent/stable sources 60-75 percent of the time, leaving very little to chance with the markets.

Karin Grablin mug shot.jpg
Karin Grablin is with SRQ Wealth in Sarasota.

3. Keep a healthy emergency fund: Working individuals should keep at least three months’ worth of living expenses in cash. If you’re able to save in 2019, start here first.

Retired individuals should keep at least six months of living expenses in cash. If you’re worried about a bear market, some planners suggest extending that to up to two years’ worth of spending, so there’s no need to draw from a portfolio until the markets recover.

4. Implement good investment disciplines: If you’ve met your emergency fund goal and can save more, implementing a systematic investment plan is a great strategy in a down market.

Keeping a long-term view of the markets and buying low during volatile times can yield positive results down the road.

Remember to rebalance your portfolio periodically. Rebalancing involves buying/selling investments to maintain a desired asset allocation, targeted toward goals and risk tolerance.

If you haven’t rebalanced your portfolio lately, you may have taken on more risk than desired before the markets turned volatile. Be aware of the potential tax implications of rebalancing.

5. Work out a good debt management plan: Inventory your debts, ranked by interest rate. Consider using extra cash to pay off debt (especially credit cards), starting with the highest interest rates first.

Why? Investing in debt retirement provides a guaranteed return equal to the debt’s interest rate — potentially difficult to attain (short-term) by investing in volatile markets.

6. Keep the rest of your financial plan fit: No one controls the markets, but once steps are in place to prepare for them (up or down), another good resolution is to get the rest of your financial house in order.

With your financial planner:

Review projected taxable income to make sure there will be no surprises come April.

Examine your insurance policies (life, disability, long-term care, liability) to ensure you have the appropriate coverage at the right cost.

Revisit your estate plan; confirm beneficiaries on all accounts, and affirm you have the correct documents to fulfill your wishes if something happens to you.

7. Stay physically healthy: A study by the American Heart Association in 2016 revealed that individuals who exercised moderately paid about $2,500 less in annual health care costs related to heart disease than those who did not exercise.

One of the best strategies to promote financial success in retirement is to stay physically healthy as long as possible.

Setting financial resolutions for the New Year can help you short- and long-term goals and even improve the way you feel.

Good luck with yours.

Karin Grablin, CPA, is with SRQ Wealth, 2033 Main St., Suite 103 in Sarasota, and can be reached at 941-556-9004 or