SALT LAKE CITY — Resolving to improve oneself is a tradition for many people when the New Year arrives, but a new report indicates fewer people will make resolutions regarding their finances — due mostly to the bullish economy.
The annual Fidelity Investments New Year Financial Resolutions Study showed that just 27 percent of respondents intend to make a financial resolution for 2018 — down significantly from a high point of 43 percent in 2014. The reason for the change could be strongly linked to the nine-year run of prosperity for the national economy, one analyst surmised
“Financial resolutions are on the decline because many people are feeling better about their personal financial situation and are generally optimistic about what 2018 will bring,” said Ken Hevert, senior vice president of retirement at Fidelity. “Now is not the time to take one’s foot off the pedal, because good financial times can represent the best opportunities to help achieve your goals and establish saving and investing habits that can get one through good times and bad."
While most respondents said they would not make resolutions, a larger percentage suggested they would save more because of their improved financial circumstances. The study showed that 66 percent of respondents who feel they are now in a better financial position attributed it in part to being able to save more. Among millennials, 90 percent feel they will be better off financially in 2018 than previously.
For those citing increased saving among their top financial priorities for the new year, 54 percent plan on doing so to meet long-term goals, while 38 percent plan to focus on the shorter term, said Zan Hughes, vice president and Salt Lake City investor center manager at Fidelity Investments.
"The market is at a high — the second-longest bull market ever in history," he said. "Now is the time that (people) should be carving off that little extra money to save for retirement or even their short-term goals."
He said putting away money for expenses like vehicle or home repairs can make a big difference when something unexpected happens. He also noted that rising health care expenses could be something that require people to dip into savings unexpectedly.
"People should have a rain day fund," he said. "We encourage (clients) to have 20 percent so they have it there."
When times are good, people tend to overlook the importance of saving, Hughes said, but it is actually the best time to implement strategies that allow individuals and families to invest in their future financial well-being.
Holladay residents Dick and Gayle Denman spent many years working on saving for their time after their work lives ended. Now with both retired, they are trying to figure out the best way to manage their finances going forward.
"Education is the key," Dick Denman said. There are many sources of information that people could use to develop a sound financial plan.
Gayle Denman also recommended consulting with financial advisers to learn about strategies for saving and planning for the future, particularly for young people who may not realize the value of starting to save earlier rather than later.
"We tell our young relatives, 'Just start saving money now,'" she said. "(It's shocking) when you look at (compound interest tables) that show if you start saving when you're 18 how much wealth you could have by the time you're 65."
Jeff Solomon, branch manager for Solomon Financial Advisors/Raymond James in Salt Lake City, said taking a long-term view to saving can be a key factor building a reasonable retirement nest egg.
"Take the next step," he urged. "Increase or start funding for retirement for two reasons — inflation creates a necessity to compensate for rising costs and you are one year closer to retirement."6 comments on this story
He advised those already contributing to their retirement plan to review their current allocation strategy and to make adjustments where necessary.
"The market has had an amazing run. That’s not to say it won’t keep going but these increases will naturally change the percentage allocation in your portfolio between asset classes," Solomon said. "Investors should make sure they are comfortable with allocations going forward based on time horizon, risk tolerance and other considerations."