Why Most New Year's Resolutions Fail and How to Set Financial Goals that Actually Stick

journal opened with page saying new year goals

Every January, millions of people make New Year’s resolutions with the best of intentions. They vow to lose weight, exercise more, or get their finances in order. Yet, by February, most resolutions have fizzled out. Studies show that 80% of resolutions fail before the year even reaches March. So why does this happen? And more importantly, how can middle-aged married couples set financial goals that actually stick?

The answer lies in shifting from quick fixes to sustainable habits. Financial success, like good health, doesn’t come from crash diets or one-time changes. It’s about crafting a plan tailored to your unique situation and sticking to it consistently.

Let’s dive into why resolutions fail and how you can create financial goals that will help you and your spouse thrive—not just in January but all year long.

Why Most New Year’s Resolutions Fail

Think of New Year’s resolutions like crash diets. You start strong and full of enthusiasm, but eventually, the restrictions or unrealistic expectations wear you down. The same thing happens with financial resolutions.

Here are the three main reasons resolutions fail:

1. They’re Too Vague

“I want to save more money” or “We need to stop overspending” are common financial resolutions. But without specifics, these goals are like saying, “I want to be healthier,” without defining what that means. Do you want to save $5,000 this year? Cut dining-out expenses by 20%? Pay off a specific debt? Clarity is key.

2. They’re Unrealistic

Many resolutions fail because they’re too ambitious. A couple trying to save 50% of their income when they’ve historically saved 5% is setting themselves up for failure. Big changes are intimidating, and when the initial motivation fades, it’s easy to give up.

3. No Plan, No Progress

A resolution without a plan is like a treatment without a diagnosis. You need to understand your current financial situation and have a step-by-step plan to achieve your goals. Without actionable steps, your resolution remains a wish, not a goal.

How to Set Financial Goals That Actually SticK

1. Start with a Financial Check-Up

Before setting goals, take stock of your current financial health. Sit down with your spouse and answer these questions:
What is our total income?
How much do we spend each month, and on what?
What debts do we owe, and what are the interest rates?
How much have we saved for retirement or other goals?
This “financial check-up” is like a physical exam—it identifies strengths and areas that need improvement. Use this baseline to set goals that are both realistic and impactful.

2. Set SMART Goals

To make your financial goals stick, follow the SMART framework:
**Specific:** Clearly define what you want to achieve. For example, “Save $10,000 for a vacation in 2026” is more actionable than “Save money.”
**Measurable:** Set benchmarks to track progress. Instead of saying, “Pay off debt,” specify, “Pay an extra $500 per month toward our credit card balance.”
**Achievable:** Be realistic about what you can accomplish, given your income and expenses. If saving $10,000 in one year feels overwhelming, break it into smaller chunks over several years.
**Relevant:** Align your goals with your values. If spending time with family is important to you, focus on saving for vacations or reducing work-related stress by paying off debt.
**Time-Bound:** Set deadlines to keep yourself accountable. For example, “Build an emergency fund of $15,000 by December 2025.”

3. Divide Goals into Short, Medium, and Long-Term

Breaking goals into timeframes helps you focus on what’s most urgent while keeping an eye on the big picture. Here’s how to structure them:
**Short-Term (1 Year):** Build an emergency fund, pay off high-interest debt, or stick to a budget.
**Medium-Term (1-5 Years):** Save for a down payment on a house, fund a vacation, or tackle student loans.
**Long-Term (5+ Years):** Plan for retirement, fund your children’s college education or save for major life milestones.
Think of it like triaging a patient—address the most urgent needs first, but always plan for long-term health.

5. Budget with Intention

A budget isn’t about deprivation; it’s about aligning your spending with your priorities. Use the **50/30/20 rule** as a starting point:
**50% for Needs:** Mortgage, utilities, groceries, insurance.
**30% for Wants:** Dining out, entertainment, hobbies.
**20% for Savings and Debt Repayment:** Retirement accounts, emergency fund, paying off loans.
For middle-aged couples, budgeting is like prescribing medication—it ensures you allocate resources where they’re most needed.

7. Revisit and Adjust Regularly

Financial goals aren’t set-it-and-forget-it. Just as a doctor adjusts a treatment plan based on progress, you and your spouse should review your finances regularly. Schedule quarterly “money dates” to discuss progress, celebrate wins, and make adjustments.
For example:
Did a medical expense or home repair set you back? Adjust your timeline, but stay committed to the goal.
Got a raise or bonus? Use part of it to accelerate your progress.
Flexibility is key to staying on track.

4. Automate Your Savings

Automation is the secret weapon for financial success. Once you’ve set your goals, set up automatic transfers to savings accounts or retirement plans, this ensures you stick to your plan without relying on willpower.
For example:
Direct deposit a portion of your paycheck into a high-yield savings account for your emergency fund.
Set up automatic contributions to a 401(k) or IRA.
Use apps to round up purchases and invest the spare change.
By automating, you eliminate the temptation to spend money earmarked for savings.

6. Celebrate Small Wins

One reason resolutions fail is that people don’t celebrate progress along the way. If you and your spouse pay off a credit card or hit a savings milestone, take time to celebrate. Rewarding yourself reinforces positive behavior and keeps motivation high.

8. Work with a Financial Planner

Sometimes, DIY isn’t enough. As you would consult a specialist for complex medical issues, working with a Certified Financial Planner™ (CFP®) can help you navigate big financial decisions. A CFP® can help you:
Maximize tax efficiency.
Create a sustainable retirement plan.
Optimize employee benefits like 401(k) matches or Health Savings Accounts (HSAs).
Fee-only fiduciary planners work in your best interest, ensuring unbiased advice tailored to your goals.

Why This Matters for Middle-Aged Couples

Middle age is a pivotal time for financial planning. You’re juggling competing priorities—raising kids, caring for aging parents, and preparing for retirement. Setting goals together as a couple ensures you’re working as a team, not at cross-purposes.

Think of it like running a hospital department: You need clear communication, shared objectives, and a plan for emergencies. By setting SMART goals and following through, you’ll create financial stability and peace of mind.

Forget Quick Fixes—Focus on the Long Game

Financial success isn’t about quick fixes or overnight transformations. It’s about creating a roadmap that works for you and your spouse and committing to the journey. Remember, small, consistent steps are more effective than grand, unsustainable gestures.

As you enter the New Year, ditch the vague resolutions and focus on actionable financial goals that align with your values. By treating your finances like a patient in need of long-term care, you’ll set yourself up for a healthier, wealthier future.

This year, make a resolution you’ll actually keep: building the financial life you and your family deserve. And if you need guidance along the way, don’t hesitate to reach out to a financial planner who can help you turn those goals into reality.

Partnering with Outside The Box Financial Planning (OTBFP) offers numerous benefits for individuals seeking college planning, retirement planning, small business support, wealth management, and beyond. As a fee-only fiduciary with a comprehensive approach, unbiased advice, and transparent fee structure, OTBFP acts as a trusted advisor who prioritizes your best interests. Click here to schedule a complimentary “Fit” meeting to determine if we would make a good mutual fit.

Remember, financial decisions have long-lasting implications, and working with a professional like the financial professionals of Outside The Box Financial Planning can provide the expertise and guidance necessary to make informed choices that align with your financial aspirations.

Ivan HavrylyanJanuary 13, 2025

From Scrubs to Sunshine: How COLA Ensures Your Retirement Stays Infation-Proof

As a healthcare professional, you’ve spent years navigating the complex world of patient care, deciphering lab results, and tackling the ever-changing challenges of medicine. Planning for retirement might feel like stepping into uncharted territory, but there’s one key concept that parallels your work: staying ahead of a condition before it becomes critical. In the financial world, that “condition” is inflation, and “preventative care” is a little acronym called COLA—Cost-of-Living Adjustment.

Just like monitoring a patient’s vital signs helps you adjust treatment plans, COLA keeps your retirement income healthy by adjusting for the rising cost of living. Let’s break down how this works, why it’s essential, and how you can structure your retirement plan to weather inflation’s long-term impact.

Handwritten list of amenities that go up in time.

What is COLA? A Prescription for Inflation Protection

Imagine inflation as a chronic condition. It slowly diminishes your purchasing power over time. You might not notice it day-to-day, but over a decade or two, it can significantly affect your lifestyle. That gallon of milk that costs $4 today could cost $6 in 15 years. For retirees on fixed incomes, inflation is a sneaky adversary, quietly diminishing their ability to cover essential expenses.

COLA is the financial antidote to this issue. It’s a mechanism built into certain retirement income streams—like Social Security or some pensions—that automatically adjusts payments to keep pace with inflation. The idea is simple: as the cost of living rises, so does your income.

For healthcare professionals, COLA is like titrating medication dosages for a patient whose condition fluctuates. You adjust the dose to ensure the treatment remains effective, preventing a crisis. Similarly, COLA ensures your income doesn’t lose effectiveness as inflation creeps upward.

How COLA Works: A Financial Ventilator for Your Income

In the same way that ventilators adapt to meet a patient’s oxygen needs, COLA adapts your retirement income to keep it “breathing” in an inflationary environment. Social Security, for instance, applies an annual COLA based on changes in the Consumer Price Index (CPI). The CPI measures the cost of goods and services, from groceries to medical care, and reflects the average rate of inflation.

Let’s look at an example:
Suppose you retire today and start receiving $2,000 a month in Social Security benefits. If inflation averages 2% per year, your purchasing power would shrink by nearly 22% over 10 years without adjustments. However, if your benefits are tied to COLA, they increase annually to match inflation, maintaining their real value.

While Social Security is a vital source of inflation-protected income, not all retirement income streams include COLA. Many private pensions and annuities are fixed, meaning their purchasing power erodes over time. That’s why understanding which income sources have built-in COLA and which don’t is crucial for planning your retirement.

Inflation in Action: Why COLA Matters to Healthcare Professionals

As a healthcare provider, you know the importance of planning for worst-case scenarios. You wouldn’t discharge a patient recovering from surgery without ensuring they have the resources for post-operative care. Similarly, planning for retirement means preparing for the inevitable rise in expenses over time.

Healthcare professionals face unique challenges with inflation, especially considering how medical costs tend to outpace general inflation. Fidelity estimates that the average 65-year-old couple retiring today will need over $315,000 to cover healthcare expenses in retirement—and that figure doesn’t include long-term care.

Think of COLA as a financial vaccine that bolsters your retirement plan against these rising costs. Social Security’s COLA is a start, but it’s just one part of a comprehensive strategy to maintain your financial “vital signs” throughout retirement.

The Anatomy of a COLA-Proof Retirement Plan

Creating a COLA-proof retirement plan is like designing a care plan for a complex patient. You need a mix of treatments that address both immediate needs and long-term risks. Here’s how to build a retirement strategy that stands up to inflation:

1. Maximize Social Security Benefits

Social Security is the backbone of many retirees’ income plans because of its guaranteed payments and COLA protection. As a healthcare professional, you’re no stranger to maximizing resources, and Social Security offers a significant opportunity.

Key Steps:

Delay Filing: By delaying benefits past your full retirement age (FRA), you increase your monthly payment by about 8% per year until age 70. This higher base amount benefits from COLA, amplifying its impact.
Coordinate with Spousal Benefits: Married couples can use strategies to maximize lifetime Social Security income, such as one spouse claiming early while the other delays.

Think of it like using a staged treatment plan for a patient: the early intervention provides immediate support while delaying certain treatments maximizes long-term results.

2. Supplement with Inflation-Protected Investments

Beyond Social Security, you’ll need other income streams to cover your expenses. Here’s where investment planning comes into play.

Options to Consider:

Treasury Inflation-Protected Securities (TIPS): These are government bonds designed to protect against inflation. Their principal value adjusts with the CPI, ensuring your investment keeps pace with rising costs.
Dividend-Growing Stocks: Some companies regularly increase their dividends, which can provide a growing income stream over time.
Real Estate: Rental properties or REITs (Real Estate Investment Trusts) can offer income that tends to rise with inflation.

Think of these options like supplemental oxygen for your retirement plan, ensuring you can “breathe easy” even as costs rise.

4. Incorporate Flexible Spending Strategies

Flexibility is key when managing a chronic condition, and the same goes for your finances. A mix of fixed and variable income sources gives you the adaptability to adjust as inflation fluctuates.

Examples:

Use fixed income sources (like a pension) to cover essential expenses.
Use variable income (such as portfolio withdrawals) to manage discretionary spending, adjusting withdrawals based on market performance and inflation.

It’s like creating a care plan with both baseline treatments and as-needed medications, ensuring you can handle both predictable and unexpected costs.

3. Plan for Healthcare Costs

Healthcare inflation is like a rare but aggressive disease—it requires special attention. Medicare provides a baseline of coverage, but out-of-pocket costs can add up quickly.

Strategies:

Health Savings Accounts (HSAs): If you’re still working, max out your HSA contributions. These accounts offer tax-free growth and withdrawals for qualified medical expenses, making them a powerful tool for managing healthcare inflation.
Medigap Policies: Consider supplemental insurance to cover expenses Medicare doesn’t, such as copays and deductibles.

This is your financial equivalent of specialty care: targeted strategies for a high-risk area of your retirement plan.

Woman getting her blood pressure taken by medical professional.

The Long Game: Monitoring and Adjusting Your Plan

Retirement planning isn’t a set-it-and-forget-it process, just as patient care requires ongoing monitoring. Regular check-ups with your financial advisor can help you adjust your strategy to reflect changes in inflation, healthcare costs, or personal circumstances.

Questions to Ask During a Financial Check-Up:

Are my income sources still aligned with my expenses?
How has inflation impacted my budget in the past year?
Do I need to adjust my investment allocations to maintain purchasing power?

This ongoing oversight ensures your financial health stays on track, much like tracking a patient’s recovery trajectory.

Closing Thoughts: A Retirement as Resilient as Your Career

As a healthcare professional, you’ve dedicated your career to improving others’ quality of life. Your retirement years should reflect the same level of care and intentionality you give your patients. By understanding the role of COLA and building an inflation-resistant strategy, you can transition from scrubs to sunshine with confidence.

Retirement is your time to thrive—not just survive. With a well-designed plan that accounts for inflation, you’ll have the financial stability to enjoy your hard-earned freedom, whether that means traveling, pursuing hobbies, or simply savoring time with loved ones.

After all, just as you wouldn’t discharge a patient without a robust recovery plan, you shouldn’t embark on retirement without ensuring your income is prepared for the long haul. COLA is one of the key tools to keep your retirement healthy and vibrant, no matter how the cost of living changes over time.

By planning proactively and staying adaptable, you’ll ensure your retirement lifestyle doesn’t just survive inflation—it thrives in spite of it. If you need help designing a COLA-proof plan, let’s talk. After all, every great retirement plan starts with a clear diagnosis and the right “treatment.”

Ivan HavrylyanDecember 27, 2024

Maximizing Your Social Security: A Treatment Plan for Your Retirement Income

Social Security cards laying on top of American twenty dollar bills

When it comes to retirement planning, Social Security is a critical income stream that often serves as the foundation for many retirees' financial well-being. Much like creating a treatment plan for a patient, your Social Security strategy needs to be carefully coordinated with other elements of your financial life to achieve the best outcome.

This blog will walk you through how to maximize your benefits, including spousal options, how working affects your Social Security, and how to incorporate it all into a broader retirement income plan. With the right strategy, you can ensure your Social Security works as efficiently as possible, whether you claim early or late, and whether you continue working or transition fully into retirement.

1. Understanding When to Claim Social Security: The Age Matters

Social Security offers flexibility in when you can start receiving benefits. The timing of your claim has a big impact on how much you’ll receive for the rest of your life.

Early Claiming (Age 62): The earliest you can start collecting Social Security.

Benefit: Income starts flowing sooner.

Drawback: Monthly benefits are permanently reduced by about 25-30% if you claim before your full retirement age (FRA).

When it makes sense: If you have a shorter life expectancy or need income immediately, this can be the right choice.

Full Retirement Age aka FRA (66-67, depending on your birth year): Claiming at your FRA means you’ll receive 100% of your benefit based on your earnings history.

Delayed Retirement (Age 70): For every year you delay past FRA, your benefit increases by 8% annually up to age 70.

When it makes sense: If you are healthy and have other income sources, delaying Social Security provides a larger monthly income for the rest of your life.

Key Takeaway: If you want to maximize your benefit and can afford to wait, delaying until 70 offers the highest payout. However, if you need income sooner or have health concerns, claiming earlier might make more sense.

2. Optimizing Spousal Benefits: Don’t Leave Money on the Table

White senior couple embracing and smiling

Spousal benefits can be a powerful way to boost household income in retirement. Here’s how it works:

Eligibility: The lower-earning spouse can receive up to 50% of the higher-earning spouse’s benefit if claimed at FRA.
Claiming Early: If the spouse claims before FRA, their spousal benefit will be reduced.
Both Spouses Delaying: Even if the lower-earning spouse delays their own benefit, spousal benefits max out at FRA—delaying past FRA won’t increase the spousal benefit.
Widow(er) Benefits: A surviving spouse can switch to 100% of the deceased spouse’s benefit if it’s higher than their own.

Example:
If your spouse's benefit is $3,000 at their FRA and you are eligible for a spousal benefit, you could receive up to $1,500. If your own benefit is smaller than that amount, it makes sense to claim the higher spousal benefit.

Strategy Tip: Coordinating when each spouse claims benefits can maximize household income. For example, the lower-earning spouse may claim their benefit early, while the higher-earning spouse delays until age 70 to lock in the highest possible payout.

3. Integrating Social Security into a Comprehensive Income Plan

Just as doctors treat the whole patient—not just the symptoms—you need a plan that integrates Social Security into your broader financial picture. The key is to ensure Social Security works harmoniously with other income streams, such as pensions, 403(b)s, or IRAs.

Scenario 1: If You Continue Working After Claiming Social Security

If you plan to keep working after starting Social Security, it’s essential to understand how earning income impacts your benefits:

Before Full Retirement Age: If you claim Social Security and work, your benefits could be reduced if your earnings exceed the annual limit ($21,240 in 2024). For every $2 you earn above the limit, $1 is temporarily withheld from your benefits.
The Year You Reach FRA: The income limit increases significantly ($56,520 in 2024), and only $1 is withheld for every $3 earned above the limit.
After FRA: Once you reach full retirement age, there’s no reduction in benefits, no matter how much you earn.

Planning Tip: If you plan to keep working, it may make sense to delay Social Security to avoid penalties and maximize your future benefits. Alternatively, you could claim early and accept reduced benefits if you need the cash flow.

Scenario 2: If You Fully Retire After Claiming Social Security

For those fully retiring, the goal is to create a steady, sustainable income stream. Social Security will play a major role, but coordinating withdrawals from other accounts is essential to minimize taxes and ensure your savings last.

INCOME PLANNING FOR RETIREES:

Rebalancing Your Portfolio:
Incorporate Social Security as a fixed income source in your overall asset allocation. With Social Security acting like a bond, you may be able to take on more growth-oriented investments in your other accounts.
Sequence of Withdrawals:
Instead of a one-size-fits-all approach, consider a coordinated withdrawal strategy. Balancing distributions from taxable, tax-deferred (like IRAs and 401(k)s), and even tax-free accounts can help you maintain your desired tax bracket, optimize Social Security taxation, and make your retirement savings last longer. A tailored plan ensures that each dollar works smarter for your overall financial health.
Minimize Social Security Taxes:
Up to 85% of your Social Security benefits can be taxed if your combined income (Social Security + other income) exceeds certain thresholds. Instead of relying on Roth IRA withdrawals early in retirement, consider implementing a Roth conversion strategy during years of low or no income—often before Social Security benefits begin or while delaying them until age 70. This approach allows you to move assets from tax-deferred accounts to a Roth IRA at lower tax rates, potentially reducing your taxable income later in retirement and minimizing the impact on your Social Security benefits.

4. Social Security in the Context of Longevity and Inflation

While Social Security provides a reliable income stream, it’s important to think about the long-term risks you may face in retirement—especially longevity risk and inflation.

Longevity Risk: If you live well into your 90s, delaying Social Security can help make sure you have a higher income stream later in retirement and preserve your savings. Example: A retiree who claims at 70 will receive a larger monthly check that will continue to grow with inflation over the years.
Inflation Protection: Social Security benefits include Cost of Living Adjustments (COLAs). In high-inflation environments, these COLAs help maintain your purchasing power. While COLAs may not keep up with every expense, they offer more protection than many fixed-income sources.

5. Putting It All Together: A Holistic Approach to Retirement Income

Here’s how to pull all these pieces together into a cohesive Social Security and retirement income plan:

Evaluate Your Health and Longevity Prospects: If you expect to live a long life, delaying benefits makes more sense. If health concerns arise, early claiming may be better.
Coordinate with Your Spouse: Decide when each spouse should claim benefits to maximize total household income.
Plan Around Your Work Status: If you continue working, consider delaying Social Security to avoid reductions and taxes.
Incorporate Social Security with Other Income Sources: Use a tax-efficient withdrawal strategy to balance Social Security with pensions, investments, and other savings.
Account for Inflation and Longevity Risk: Ensure your plan remains flexible to account for rising costs and a potentially long retirement.

Conclusion: Social Security as Part of Your Retirement Treatment Plan

Planning for Social Security is like creating a well-thought-out treatment plan—it requires understanding your options, making the right decisions at the right time, and coordinating with other elements of your financial life. Whether you continue working after claiming Social Security or fully retire, your strategy should reflect your unique circumstances, health, and goals.

Remember, Social Security isn’t just about when you claim—it’s about how you integrate it into a larger income plan that keeps you financially healthy throughout retirement. Much like medicine, there’s no one-size-fits-all solution. A thoughtful strategy, tailored to your needs, can ensure your retirement income plan works just as well as a carefully prescribed course of treatment.

If you’re ready to build or adjust your Social Security strategy, consider sitting down with a financial planner to create a customized plan for your future. After all, the right prescription can make all the difference.

Retirement PlanningIvan HavrylyanDecember 13, 2024retirement, income