This week, millions of Americans are writing a list of New Year’s resolutions. These promises are usually meant to improve your lifestyle in the New Year, both physically and financially.
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But according to the 6th annual New Year’s Resolution Survey from Allianz Life Insurance Company of North America, the majority of Americans will be more concerned about their waistlines than their wallets next year.
“With a healthier U.S. economy, continued market strength and lower unemployment, people have forgotten the trauma they experienced in 2008-2009 and have more confidence in the state of their finances,” said Katie Libbe, vice president of Consumer Insights for Allianz Life. “Things are looking up, but that can change overnight and it’s important that people take the time to review their current financial situation and determine if any changes are necessary that can help them meet both short- and long-term goals.”
Here are more of Libbe’s takeaways and follow-up advice from the survey:
Boomer: What are a few of the top worries the survey found related to Baby Boomers?
Libbe: Every year, Allianz commissions a “New Year’s Resolution Survey “to ask Americans about their state of mind on a variety of topics entering the New Year. In addition to sharing their most important focus areas for 2015, they were asked to comment on how stressed they feel compared to the same time last year and what factors are causing them the most concern.
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Overall, fewer (34 percent) of older Americans (ages 55+) said they were feeling “more stressed” than the total group of respondents in the survey (40 percent) with the majority of the 55+ group noting they feel “about the same” (46 percent). The top threats of 2014 causing them the most worry include “ISIS and other terrorism threats,” “data breaches by big retailers that could trigger identity theft,” and “market uncertainty so I cannot confidently grow retirement savings.” This last concern is notable as it highlights the fact that, even during a relatively strong year for market performance, many boomers are still wary of placing a lot of trust in the market when it comes to their retirement savings.
I see this as a positive, as boomers should be more protective of their retirement savings at this stage in their lives. While asset accumulation is important, boomers need to start thinking about how they will generate retirement income and the different strategies that can help make sure their money lasts as long as they do.
Boomer: The survey finds a renewed focus on health/fitness for 2015. How does this affect the boomer generation?
Libbe: Health/fitness is always an important topic at this time of year, so it’s no surprise that it ranks highly for most Americans as a top focus area for 2015. In fact, “health/wellness” was the overwhelming choice for older Americans in the survey, with 61 percent making it their top selection, compared to less than half (49 percent) of the total survey respondents.
While it’s great that boomers are using the New Year as a means to assess their physical well-being, it’s also important for them to use this time of reflection and planning to think about their finances. New Year’s resolutions can be a great opportunity for them to analyze their financial situation and determine if any changes are necessary in order to reach their retirement goals, which get closer every day. Finding a way to shed a few excess pounds and eliminate unhealthy habits are definitely positive goals, but researching and implementing ways to gain more confidence about retirement should be just as important. After all, chances are that healthy financial habits will help you live longer in retirement.
Boomer: Financial planning remains a lower priority according to the survey. Where does that put boomers’ retirement planning in the future?
Libbe: Only 30 percent of older Americans in the survey chose “manage money better” as a New Year’s Resolution they were likely to make and keep, and only 13 percent said that financial planning is included as a resolution for 2015. This is a bit concerning because, even if they are already in retirement, it’s a good idea for people to keep financial planning top of mind.
For many Americans – including 55+ respondents –several barriers exist that keep them from making financial planning a top priority. In fact, more than a quarter (28 percent) of survey respondents said they are not including financial planning in their resolutions for the upcoming year because they “don’t make enough to worry about it.” While it’s reasonable to have this opinion, it’s important for people – particularly boomers who are closer to retirement – to know that it is not true and there are planning options available for every income level. It may take some work to find the right help, but there are options available, both financial professionals and online resources, which can help plan your financial future.
One positive takeaway from this year’s survey is there seems to be a willingness from older Americans to get help with financial planning in 2015. When asked if they had free access to the top professionals in various roles, 44 percent of the 55+ respondents selected “financial professional,” well ahead of “nutritionist” (35 percent) and “personal trainer” (17 percent). This indicates that there is a desire from this age group to learn more about this complex topic and discover some of what they might be missing. Although they may not want to make the leap to active financial planning, there is an understanding that they could benefit from professional assistance when planning for their retirement.
Boomer: How should Baby Boomers handle credit card debt?
Libbe: Nearly 20 percent of respondents to the Allianz Life 2015 New Year’s Resolution Survey highlighted “pay off credit cards” as the one way they would like to improve their finances in 2015. The situation is no different for older Americans as the exact same percentage (19 percent) noted their concern with credit card debt heading into the New Year.
So how should boomers address this issue? There is no magic bullet for erasing credit card debt – it takes discipline and planning, just like achieving any other financial goal. It’s important to start by making monthly payments on time, even if you can only make the minimum. High interest fees pile up quickly if you are not diligent about meeting payment deadlines. Another strategy is to try and pay with cash as much as possible until the debt is resolved. It’s challenging to dig out of a hole if you continue to dig deeper, so any effort to limiting credit card spending can really help toward achieving the end goal of zero debt. Finally, change your thinking about how you use credit. Too often, people spend differently with credit since the actual transfer of funds is not immediate. Boomers need to take a stand and start making sure their spending habits align with their overall financial plan.