Ken Hevert is vice president for personal and small-business retirement products for Fidelity Investments, where he focuses on retirement income planning, annuities, IRAs and overall retirement investing. He is a registered securities representative and securities sales supervisor with 23 years of experience in retirement and investment strategies. His expertise has been quoted in USA Today, Forbes, Bloomberg, The Wall Street Journal, SmartMoney, Kiplinger’s and CNN Money.
Hevert has a bachelor’s degree in economics from the University of Rhode Island.
PBN: As Americans look forward into 2014, it’s naturally a time to make resolutions. Fidelity Investments released the results of its “New Year Financial Resolutions Study” in mid-December. What was the major finding, as far as the percentage of people specifying resolutions with a financial aspect? Has the tendency toward making financial resolutions increased or decreased, and over what period of time?
HEVERT: Our survey found that more than half of Americans – 54 percent – are ringing in 2014 with a financial resolution. An interesting finding is that the number of people making financial resolutions is up from 35 percent in 2009, when the tracking study began.
PBN: What are main financial resolutions people are making? Have they changed in the past year or over the course of the study since it began in 2009?
HEVERT: This is the third consecutive year people are considering the same top three financial resolutions. Fifty-four percent of people want to resolve to save more, 24 percent want to pay off debt and 19 percent plan to spend less. One change with the 2014 financial resolutions is that paying off debt moved up to the number two spot, bumping spending less down to the third most popular financial resolution. The emphasis on debt reduction has been steadily increasing - it was at 8 percent in 2010, compared to the 24 percent for the 2014 resolutions. One of the silver linings of the financial crisis of 2009 is that a growing number of Americans are paying closer attention to their personal economies – they’re more conscientious about are making, and keeping, their commitments to save more and spend less, having been through that period of uncertainty. It’s still fresh in their minds some five years later.
PBN: Did the study find out whether people are keeping the resolutions they made? What tends to help people stick to their financial resolutions?
HEVERT: The good news is that our survey found that nearly half say they achieved more than 80 percent of their goals and 8 out of 10 say they track their progress. Moreover, when asked what was more important, to be financially fit or physically fit, financial fitness had the edge. Still, about 30 percent of those surveyed “confessed” that they made financial resolutions, but weren’t able to stick to them. Aside from that, 43 percent of those who took the survey said they don’t even consider making financial resolutions. When asked what would help them stick to their resolutions, the top motivators cited were being able to calculate the benefits, getting a reward once the financial goal was reached and breaking the overall goal down into more achievable goals. Making resolutions as a family is an important factor, too. Of note, 44 percent indicate they tend to make financial resolutions by themselves, with only 29 percent making them as a couple. Interestingly, Fidelity’s recent “Couples Retirement Study” found that making a financial decision jointly adds the dimension of accountability. We see long-time couples who make financial plans together recognize that this is a powerful way to achieve financial goals and to increase each spouse’s confidence in dealing with financial matters. This is especially true for women who are increasingly expected to make financial decisions alone due to life events like death, divorce or caring for an ill spouse. When both partners work with a trusted investment professional, it helps them develop goals that are understandable and achievable. It also helps foster greater confidence about their retirement readiness, should one spouse ever be in the position of having to manage the finances by themselves.
PBN: What’s your perspective on what the findings mean, in terms of the U.S. economy?
HEVERT: Reflecting back on the stormy days of the recession, many consumers appear to be focusing more on saving for the short-term and building up a rainy day fund as an umbrella to cover future unexpected costs. Overall, I think the findings reveal that the financial crisis of five years ago forced many people to wake up to the importance of preparing for unexpected events that could impact their finances. This year’s findings show an increasing recognition about achieving a balance between near-term and long-term financial goals. This may encourage more people to seek guidance from professional advisers who can help them determine what their short- and long-term saving goals are and also help them understand ways they can maximize workplace savings plans to save more for retirement.
PBN: Did you break down the study in individual state information, particularly related to Rhode Island?
HEVERT: Fidelity’s “New Year Financial Resolutions Study” is national and it’s not broken down by state, so there’s no Rhode Island-specific data. With Fidelity’s Rhode Island campus being based in Smithfield and our investor center located in downtown Providence, we have our finger on the pulse of what local investors are thinking. Among the most common questions our investment professionals are asked by clients are, “Am I going to make it in retirement?” and “Will money last my lifetime in retirement, and if not, what can I do now to improve the situation?” The Rhode Islanders we work with, like other investors, are determined to improve their financial outcomes and want to know how they can grow their portfolios with confidence. They want seek the help of a trusted financial professional who can help them understand how to keep their personal economies on track.
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