• Wealth Management

New Year’s Resolutions: Don’t Overlook Your Finances

Don’t overlook resolving to focus on your finances this year. You can make a financial New Year resolution that may yield results for years to come.

Deciding to lose weight, eat healthier or finally get organized are popular New Year’s resolutions. But don’t overlook resolving to focus on your finances. You can make a number of financial New Year’s Resolutions that can pay dividends for years to come. 

Retirement Savings

Consider maxing out your retirement-plan contributions. For 2018, you can add as much as $18,500 in savings to a workplace retirement plan, such as a 401(k), up from $18,000 in 2017. Workers over 50 years old can save an additional $6,000 in “catch-up” contributions. Can’t save up to the maximum? Be sure to consider contributing at least enough money to take advantage of any matching funds from your company. Because workplace retirement plans are tax-deferred accounts, you generally don’t pay income taxes on any earnings from your investments until you withdraw funds.

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For individual retirement accounts, the contribution limit remains $5,500 up until 2019. You have until April 17, 2018, to make contributions for 2017.

Family Gifts

With the costs of college tuition and housing both rising, you may resolve to help out family members financially with those or other large expenses. For 2018, the annual gift tax exclusion is $15,000. A 529 college savings plan is a tax-advantaged way to save for higher education and allow you to gift savings to your children, grandchildren, other relative or even a friend. With a 529, you can gift a lump sum—up to $75,000 in one year ($150,000 for married couples)—and then treat the gift as if it were given evenly over a five-year period.

Asset Allocation

Consider revisiting your asset allocation, or how your investments are divided among equities vs. fixed income vs. cash. Your asset allocation should reflect your savings goals and stage in life. For example, as you get closer to retirement age, you might consider moving some savings to a more conservative asset allocation, with a greater percentage of your assets invested in fixed income.

Also, the multiyear bull market in stocks may mean that a greater share of your money might be invested in stocks than you are comfortable with.

“No one ever wants to see their assets dissipate. However as you get closer to retirement, you truly cannot afford any asset erosion,” says Marilyn Booker, Managing Director and Head of Morgan Stanley's Urban Markets Group.


Your financial advisor can help you determine how your assets and overall financial plan can be aligned with your goals.

Estate Planning/Insurance Check-Up

The start of the year is a good time to make sure that you have updated all of the information for the beneficiaries named in your various policies and estate planning documents, such as life insurance policies, wills, and retirement plans.

Don’t have an estate plan, with a will, durable power of attorney or health care proxy in place yet? If not, you should resolve that this is the year you create an estate plan.

Also, ensure that you have sufficient insurance coverage for your family. If your employer doesn’t offer disability insurance, you may want to consider buying a policy. Long-term care insurance can help protect you from hefty health care costs. An estimated 70% of people turning age 65 can expect to use some form of long-term care during their lives.1 If you tend to procrastinate, remember that the older you get, the more expensive the cost of some insurance premiums.

Don’t forget to create a plan for your digital assets as well. Can your family members find the usernames, passwords and other necessary information to access your online accounts if needed?

If you have aging parents, consider having a conversation with them about their estate planning so you’re prepared if they become ill or incapacitated.


Determine how much of your income and time you want to devote to charitable efforts in 2018. If you have a more substantial amount of money to donate, consider a donor-advisor fund. A DAF is a charitable-giving instrument that provides a simple and effective way for you to direct gifts, year-round, to your favorite charity from a single account.

Staying on Track

For many of us, resolutions are a distant memory by Feb 1st. To ensure that doesn’t happen to you, consider checking in with yourself in regularly to see the progress of your goals. Booker suggests writing your goals down and putting them in a place you look at often—such as on your desk, your smartphone, or a sticky note on your mirror.

Talk with your Morgan Stanley Financial Advisor (or find one here) to discuss your plans for 2018.

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