Financial Resolutions Up 54 Percent Since 2009;
Balancing Long- and Short-Term Savings Goals
BOSTON – This year’s stock market performance is not the only all-time high for 2013. Fidelity Investments®’ fifth annual New Year Financial Resolutions Study found a record number of Americans (54 percent) are ringing in 2014 by considering a financial resolution — a number that has increased by 54 percent since the tracking study began in 2009. A key reason for this strong resolve: 26 percent of survey participants say they are in a better financial situation than they were this time last year, up from 19 percent in the previous year.
For the third consecutive year, among those considering a financial resolution for 2014, the top three New Year financial resolutions continue to be saving more (54 percent), paying off debt (24 percent) and spending less (19 percent). However, this year “paying off debt” passed “spending less” for the number two spot. This emphasis on debt reduction has been steadily improving since the study began, and has seen a threefold increase since 2010, when it was at a single-digit low of 8 percent.
“These findings suggest individuals are taking more control over financial matters, leading them to feel better about their personal situations, which is a great way to ring in the New Year,” said Ken Hevert, vice president of retirement products, Fidelity Investments. “Making financial resolutions, such as saving more and paying off debt, can have a tremendous impact on the financial and emotional well-being of a household, so it’s encouraging to see that so many Americans intend to build a stronger financial foundation in the year ahead.”
2014: The Year of the Balanced Savings Plan?
Of those who identified saving as one of their top three financial resolutions for 2014, there was a shift toward saving more for short-term goals (such as paying down credit card debt, building an emergency fund or saving for big ticket purchases) rather than long-term goals (such as retirement, college savings or retiree health care). In 2013, the percentage of those who chose short-term financial goals as a priority rose to 39 percent, up from 29 percent in 2012; those who chose long-term financial goals dropped to 53 percent, down from 65 percent in 2012. While that could mean less money is being earmarked to achieve long-term goals, it’s also possible more respondents are recognizing the important balance between short- and long-term goals.
“The financial crisis of five years ago forced many people to wake up to the importance of preparing for whatever may come their way,” said Hevert. “This year’s findings suggest people are increasingly recognizing the importance of achieving a balance between meeting near-term financial goals and planning for the long term. Hopefully, this means that some important lessons have been learned, including avoiding costly moves such as tapping into a retirement nest egg simply to lower debt payments and have short-term cash on hand.”
Financial Planning Works Better if You Do It Together
Consistent with previous years, almost three in 10 (29 percent) survey participants “confess” that although they made financial resolutions in the past, they were unable to stick with them. What could strengthen this group’s financial resolve—along with the 43 percent who generally do not consider making financial resolutions?
The survey provides several possible solutions. When asked what would help them make and/or stick to their resolutions, the following were cited as the top motivators: being able to calculate the benefits, getting a reward once the financial goal was reached and breaking the overall goal into more achievable ones. Of note, 44 percent indicate they tend to make financial resolutions by themselves, with only 29 percent making them as a couple.
“According to Fidelity’s 4th annual Couples Retirement Study, which was released earlier this year, the number one piece of advice long-time couples had was to make all financial plans together,” said Hevert. “This is smart advice, because joint accountability can be a powerful way to achieve financial success. At a minimum, it can help avoid unwanted surprises.”
Fidelity Offers Resources for Those Looking to Maintain their Resolve
To help investors who are considering a financial resolution this year, Fidelity has published a new Viewpoints® article called “Keep your resolutions in 2014.” The article provides a month-by-month guide for the year ahead that can help investors get their finances in order, and includes tips on saving more, budgeting, and the importance of having an appropriate asset allocation across your portfolio. In addition, “Ten things to do before year-end” offers a useful financial reality check, with guidance on how to prepare for 2013 taxes and how to save more.
For those interested in learning how to keep their resolutions for enhancing their retirement nest egg, Fidelity offers educational articles, including “Rev Up Your Readiness to Retire,” “What Will You Spend in Retirement?” and “Should You Take Social Security at 62?”, as well as a Retirement Roadmap Special edition devoted exclusively to retirement planning.
People considering a financial resolution can discuss both short- and long-term savings strategies with a Fidelity investment professional at one of Fidelity’s 183 Investor Centers or by calling 1-800- FIDELITY (1-800-343-3548) for a consultation with an investment professional.
For more information on Fidelity’s New Year Financial Resolutions Study, an executive summary and infographic can be found on Fidelity.com.
About the New Year Financial Resolutions Study
This study presents the findings of a telephone survey conducted among two national probability samples, consisting of 2,027 adults, 18 years of age and older. Interviewing for this CARAVAN® Survey was completed on November 7-11, 2013 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. For more information on Fidelity’s New Year Financial Resolutions Study, an executive summary and infographic can be found on Fidelity.com.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.5 trillion, including managed assets of $1.9 trillion, as of October 31, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.