BOSTON--(EON: Enhanced Online News)--According to Fidelity Investments® eighth annual New Year Financial Resolutions Study, as 2016 comes to a close and people prepare for the New Year, there’s plenty to feel good about: looking back, 45 percent say they are in a better financial situation this year, a number that is significantly better than the previous year (39 percent) and the highest level since the inception of the study. Looking forward, 70 percent predict they will be better off financially in 2017. And, the number of people planning to ring in the New Year with a financial resolution is holding steady for the second year in a row—36 percent in 2016 vs. 37 percent in 2015. Those who aren’t might want to reconsider, though, because the study offers significant reasons for people to place it at the top of every “to do” list.
“Six tax-saving tips to complete by year end”
“The fact is, people who make resolutions on money matters tend to feel better about the state of their finances and are generally in better financial shape than those who don’t,” said Ken Hevert, senior vice president of Retirement at Fidelity. “The start of a New Year is the perfect time to review your financial plan. Even if you don’t like making specific resolutions, you can still resolve to identify financial areas that might need some improvement and make some smart financial moves before December 31.”
For the year ahead, the top picks among those considering a financial resolution are:
- Save more (50 percent, down from 54 percent in 2015)
- Pay down debt (28 percent, down from 32 percent in 2015)
- Spend less (16 percent, compared to 19 percent in 2015)
Despite the optimism expressed by so many survey respondents—and of note, nearly 9 in 10 (87 percent) Millennials believe they will be better off financially in 2017—there were concerns for what the future may hold. For the second year, “unexpected expenses” topped that list of financial concerns as the New Year approaches (65 percent, up slightly from 2015), although fears related to the economy followed closely behind at 62 percent, a significant increase over the prior year (53 percent). For those worried about the economy, 42 percent said they were most concerned about global or political instability, while 29 percent pointed to its overall strength.
Americans Saving For All the Right Reasons
Among those listing saving as one of their top financial resolutions for 2017, the majority (62 percent) plan to do so for long-term goals, while 32 percent plan to focus on the near-term. Although this two-to-one ratio is consistent with the prior year’s survey, there were some notable changes in respondents’ savings priorities:
- Among those who plan to focus on the long-term, almost two-thirds (64 percent) want to save more for retirement in an IRA or 401(k), up considerably over the previous year (53 percent). Significantly, nearly half of all respondents plan to increase their retirement saving by one percent or more in the year ahead—and, 61 percent of Millennials plan to do so.
- Among those who plan to focus on the short-term, 72 percent want to put more into an emergency fund. This number is an increase over last year (60 percent) and a 20-percentage point jump from 2014 (52 percent).
“This suggests people are focusing on the right things when it comes to saving,” said Hevert. “Whether it’s a new roof for your home or a medical emergency, the unexpected can throw your finances for a loop. In fact, for those whose resolutions fell short in 2016, almost three-quarters said they were derailed by unforeseen expenses. Setting aside an emergency fund can create a buffer against the unknown, protecting the funds you’ve saved for other priorities, such as retirement savings. On that note, it’s encouraging to see that so many people are committing to increasing their annual retirement savings contribution by one percent or more in 2017, as small increases can really add up 20 or 30 years down the road.”
(For a look at America’s preferences when it comes to making resolutions, an infographic on what consumers would rather resolve to do in 2017 can be found here.)
Believe It or Not: Making Resolutions can improve your bottom line
For the past three years, the Fidelity study has taken a look at the positive impact making a resolution can have on improving one’s financial condition. In 2016, the data reveals:
|People who made financial resolutions at the start of 2016 are||…in better financial shape||…than those who didn’t make a financial resolution.|
|More optimistic.||52 percent feel strongly they will be better off financially in 2017||Only 37 percent strongly agree with this statement|
|More debt-free.||45 percent say they are less in debt this year compared to last year||Only 34 percent feel the same way|
|More financially secure.||52 percent say they are in a better financial situation this year than last||Only 42 percent feel the same way|
What’s more, actually fulfilling resolutions can make an even bigger impact. Of those who were successful in following through with their financial resolutions1, 66 percent say they are now in a better financial situation.
Need help sticking to resolutions? Tips for getting started
For people looking to stick with a first-time financial resolution or are simply interested in pointers on how to maintain their momentum beyond January, the survey offers direction. Respondents identified the following as top motivators: feeling encouraged by the progress you’ve made so far (75 percent); being able to see the bottom-line benefit of sticking to a resolution over the year (69 percent); breaking a goal into smaller, more attainable short-term goals or rewarding yourself when you reach your goal (both tied at 63 percent).
Looking for additional information? Fidelity has published a new Viewpoints called “Three financial resolutions for 2017,” available at fidelity.com/resolutions. In addition, “Important money moves before year end” and “Six tax-saving tips to complete by year end” offer financial reality checks, with guidance on preparing for 2016 taxes and managing finances in the New Year. For those looking to improve retirement savings, Fidelity has introduced the Fidelity Retirement Score—a credit-card-like score for retirement. In less than 60 seconds, anyone can see how they are doing against their estimated retirement needs and get ideas of what to do next to improve the score. Fidelity customers can also obtain more information at the Fidelity Planning & Guidance Center.
About the New Year Financial Resolutions Study
This study presents the findings of a telephone survey conducted among two national probability samples, consisting of 2,015 adults, 18 years of age and older. Interviewing for this CARAVAN® Survey was completed on October 13-16 and 20-23, 2016 by ORC International, which is not affiliated with Fidelity Investments. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study.
About Fidelity Investments
Fidelity’s mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $5.5 trillion, including managed assets of $2.1 trillion as of October 31, 2016, we focus on meeting the unique needs of a diverse set of customers: helping more than 25 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit www.fidelity.com/about.
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1 Defined as those who indicate they achieved 80 percent or more of their financial resolution.