As the warm of glow of Christmas and the holiday season fades, the smug face of reality peers around the corner. Vacations are winding down and the work week is back in full force. Papers fly off the copier and servers struggle under the weight of productivity emanating from millions of workers returning to their labors. In this annual return to normalcy don’t let one year slip by and the next arrive without taking stock of your aspirations. Did you make progress on your 2019 goals? If not, why? Did you have any expectations for 2019 and do you have any goals for the new year? Whether you are looking for inspiration or a complete overhaul, let’s look at setting goals for 2020.
1. Reduce debt
If debt is not a problem for you then you’re ahead of the game and can skip this one. For those living with large amounts of debt, there’s no need to reiterate what kind of problems debt can cause. From a financial standpoint, debt works hard to cancel your retirement plans.
In retirement planning, you generally want to have compound interest working in your favor. This is why so many federal employees contribute to the Thrift Savings Plan (TSP). While you’re employed, compound interest works for you and can help your investments grow into a strong source of retirement income. Debt has the opposite effect. Debt takes the power of compound interest and uses it against you.
If paying off large amounts of debt is stopping you from contributing to your retirement plan, think of how harmful this can be. You’re losing the money you pay in interest on your loans, but also missing out on any potential gains you may have received if your money had been invested for retirement.
2. Decide what to do with your house.
Immediately after a discussion on debt comes the importance of deciding what to do with your house. Setting goals for 2020 involves asking at least one important question about your home. Are you going to stay in your current home in retirement? Property can be expensive, and a large, pricey one may not be compatible with your retirement plans. If you and your spouse want to spend the first 12 months of retirement traveling the world and visiting Rome, Paris, and the seven wonders of the world, you’ll need at least one very important thing…money! The problem is that an expensive house needs the same thing. In this scenario, traveling or the house may have to go—we’ll let you decide which one that is!
Many retirees enjoy downsizing in retirement simply due to the decrease in upkeep that comes with a smaller place. For some, renting provides a great option that allows for minimal responsibility. Whatever you will do with your house, it’s important to recognize that some sort of decision will need to be made. Steps can be taken in the coming year to make that process smoother and easier.
3. Attend a retirement training.
Whether you just got hired or are about to walk out of the door to retirement, it’s important to know what consequences will follow your decisions. Understanding the full range of FERS is difficult. Combining the many facets of FERS, Social Security, and the TSP into an effective and well executed plan is an even taller task. This is not a test you can cram for in one night. Retirement planning, like eating an elephant, must be done one bite at a time.
Retirement trainings may be conducted by your agency and are a great resource. If your agency does not provide you with trainings, we at Retirement Benefits Institute are here to help. We offer educational trainings throughout the country, as well as easy-to-access online trainings.
Retiring well is an achievable goal and certainly the desire of every federal employee. Reducing debt, deciding what to do with your house, and attending a retirement training will not guarantee a smooth retirement; however, they can go a long way toward easing the transition. When setting goals for 2020 we highlight these three because we’ve seen firsthand the tremendous impact they can have. The decisions you make today—especially in these three areas—can affect the rest of your life!
