Suggested Resolution

Source: Capital Pixel

Resolve to start or bolster your investment program.

If you are young:  congratulations!  One of the first principles of personal finance is to start investing early to take advantage of compounding.

Decision makers understand that taking no action is in fact a decision.  You can wait until you are 65 years old and then, after blowing out the birthday candles, figure out how you are going to produce an income to live on.  You can live on the financial edge. You can believe that things always work out.  You can procrastinate.  Know, though, that there are always things in the modern economy to sop up 100% of disposable income.  The best and the the brightest among us are working 24/7 to produce goods and services you'll want to spend your income on.  It is the way our economy works.  Too many procrastinate for 45 years.

There are plenty of seniors out there who would caution against this approach.  Many "have been there done that!"  Talk to them.  A wave of baby boomers are now retiring, and a goodly percentage will struggle financially.  They have definite thoughts on what they would have done differently both in terms of how much they saved and invested but also in how they invested.

As an aside, if feasible, ask your company human resources department to arrange a seminar featuring company retirees.  Ask the retirees to talk about retirement - how it was, what they expected, and some of the surprises, what they would do differently, and what they planned for correctly.  It can be an eyeopener and very helpful for all company employees.  Feed the retirees a nice lunch.  They will enjoy talking about their experience.

Many younger workers argue that they plan to work way past the accepted 65-year-old standard retirement age.  Good luck - the data shows that people don't work as long as they expect.  They get laid off/outsourced.  Medical problems come up.  And, yes, people burn out.  Then many  turn to Social Security and maybe take a part-time minimum wage gig.  The third leg of the stool - the so-called "nest egg" - has to take up the slack, and only 4% of that can safely be spent, according to a widely-used rule-of-thumb.

Another course is to take action now.  You can resolve to understand your company benefits.  You can resolve to read at least one good book on personal finance this year.  You can resolve to start thinking about what you need to do to have choices in the future and to support yourself and your family in the event you can't work.

HAVE A GREAT 2012!