6 Retirement Planning Steps for a New Year

In my experience, thinking of New Year’s resolutions is generally a waste of energy. If the purpose of the resolution is not sufficient motivation for implementing it, starting a new year isn’t going to change things. On the other hand, a new year does provide an opportunity to take steps toward planning your retirement. Here are a few retirement planning steps that I have taken or will take that may be worthy of consideration in 2011.

[See 10 Key Retirement Ages to Plan For.]

1. Adjust your portfolio risk. A key component of retirement planning is managing and limiting the risk of retirement failure. Risk management starts with rebalancing your retirement portfolio, including adjusting for the reality that you are another year closer to retirement. This can mean lowering your equity exposure and increasing allocations to inflation-protected assets.

2. Protect your health. Health care could be your largest retirement expense if you don’t act now to protect your health. This planning step often includes the most famous of New Year’s resolutions: Lose weight and exercise. But there is more that can be done. Get a physical, schedule that colonoscopy, get a pneumonia vaccination, and upgrade your nutrition. The positive steps you take now will likely provide a significant payback when you retire.

3. Take a pre-retirement learning vacation. Instead of going to the beach or on a ski trip, use the new year to select a location that could be on your list of potential retirement destinations. Then go there and experience it like a potential retiree. That includes, of course, relaxing and having fun.

[See 3 Risks of Purchasing a Fixed Annuity.]

4. Read a book. A new year means cold winter days, perfect for recreational reading. Go to the library, ask for a recommendation for a book about retirement living, and start learning and dreaming about what is to come.

5. Develop a hobby. When you retire, you will need hobbies. A new year is a good time to resurrect an old one or try a new one.

[See A Retirement Readiness Financial Checklist.]

6. Find a new way to save. A new year brings new retirement savings opportunities. For 2011, that can be as simple as stashing and not spending the extra money you will find in your paycheck from the 2 percent payroll tax reduction. Another suggestion: If you have a health savings account, don’t spend it. Saving and growing that HSA money until retirement is like having a Roth IRA with the extra benefit of tax-free contributions as well.

Mark Patterson is an engineer, patent attorney, baby boomer, and author of The Failsafe Retirement System. He blogs on matters of personal finance and retirement planning at Tough Money Love and Go To Retirement.