New Year, Incremental Improvement

In 1998, I ran the New York City marathon, my first and last. I got there with a training plan that gradually increased my runs from a few miles to 10+ and then 15+ mile runs as I got closer to the day of the race. I started out with gradual and incremental improvements which later presented as impressive results. We can apply the same planning and discipline to wealth-building.

A conversation I have with clients frequently is that wealth-building is a long-term prospect involving every day, incremental behaviors and decisions that cumulatively add up over time with powerful results. Wealth-building is your marathon!

Here are questions to contemplate and explore together which are especially relevant early in the year:

• If I have three months of living expenses saved, can I increase that to six months?
• Am I paying interest on (high rate) credit card debt? Can I systematically decrease my credit card debt this year?
• Is it time to own a home to build equity and wealth long-term?
• Do I own too much home and is it time to downsize as I near retirement?
• Is it time to entertain smart debt which will allow me to improve my earnings capacity and/or acquire appreciating assets?

Retirement is far away for some and not-so-far away for others. Regardless of where you are on this time horizon, you can make incremental improvement toward your retirement goals.

For example, you can consider:

• Am I contributing toward my company plan to secure the full corporate match?
• Can I incrementally increase my contributions every year to get to 10% savings of my annual pay toward retirement?

For clients who are comfortably saving 10%+ of their annual pay toward retirement, you can push into the land of high-performers which means:

• Maximizing your available contribution (ex., higher limits in a 401k plan).
• Increase savings by swapping retirement vehicles (ex., moving from an IRA to a SEP-IRA for clients who are self-employed).
• Entertaining the prospect of a Roth Conversion (converting IRA funds into a Roth IRA).

As we enter tax preparation season, if your cash flows allow and you have not yet contributed the maximum toward your individual, Roth or SEP-IRA, let me know if you want to do more and I’ll help you coordinate well before the tax deadline. We’ll be sure to let your tax preparer know you are adding more for the prior tax year.

I’m here to support you on this marathon. There will be days where you see visible improvements and we’ll celebrate your advancements. There will be days that will feel not-so-strong, but we’ll stay committed to the program and plan. Your future, older, self will thank you.