MONEY financial advisers

Proposed Retiree Safeguard Is Long Overdue

businessman putting money into his suit jacket pocket
Jan Stromme—Getty Images

The financial-advice regulations pushed by the Obama administration will save retirees, on average, an estimated $12,000.

When you are planning for retirement and ask for advice, whose interest should come first — yours or the financial expert you ask for help?

That is the question at the heart of a Washington debate over the unsexy-sounding term “fiduciary standard.” Simply put, it is a legal responsibility requiring an adviser to put the best interest of a client ahead of all else.

The issue has been kicking around Washington ever since the financial crisis, and it took a dramatic turn on Monday when President Barack Obama gave a very public embrace to an expanded set of fiduciary rules. In a speech at AARP, the president endorsed rules proposed by the Department of Labor that would require everyone giving retirement investment advice to adhere to a fiduciary standard.

The president’s decision to embrace and elevate fiduciary reform into a major policy move is huge.

“The White House knows that this is the most significant action it can take to promote retirement security without legislation,” said Cristina Martin Firvida, director of financial security and consumer affairs at AARP, which has been pushing for adoption of the new fiduciary rules.

Today, financial planning advice comes in two flavors. Registered investment advisors (RIAs) are required to meet a fiduciary standard. Most everyone else you would encounter in this sphere — stockbrokers, broker-dealer representatives and people who sell financial products for banks or insurance companies — adhere to a weaker standard where they are allowed to put themselves first.

“Most people don’t know the difference,” said Christopher Jones, chief investment officer of Financial Engines, a large RIA firm that provides fiduciary financial advice to workers in 401(k) plans.

The difference can be huge for your retirement outcome. A report issued this month by the President’s Council of Economic Advisers found that retirement savers receiving conflicted advice earn about 1 percentage point less in returns, with an aggregate loss of $17 billion annually.

The report pays special attention to the huge market of rollovers from workplace 401(k)s to individual retirement accounts — transfers which often occur when workers retire. Nine of 10 new IRAs are rollovers, according to the Investment Company Institute mutual fund trade group. The CEA report estimates that $300 billion is rolled over annually, and the figures are accelerating along with baby-boom-generation retirements.

The CEA report estimates a worker receiving conflicted advice would lose about 12% of the account’s value over a 30-year period of drawdowns. Since the average IRA rollover for near-retirees is just over $100,000, that translates into a $12,000 loss.

What constitutes conflicted advice? Plan sponsors — employers — have a fiduciary responsibility to act in participants’ best interest. But many small 401(k) plans hire plan recordkeepers and advisers who are not fiduciaries. They are free to pitch expensive mutual funds and annuity products, and industry data consistently shows that small plans have higher cost and lower rates of return than big, well-managed plans.

The rollover market also is rife with abuse, often starting with the advice to roll over in the first place. Participants in well-constructed, low-fee 401(k)s most often would do better leaving their money where it is at retirement; IRA expenses run 0.25 to 0.30 percentage points higher than 401(k)s, according to the U.S. Government Accountability Office. Yet the big mutual fund companies blitz savers with cash come-ons, and, as I wrote recently, very few of their “advisers” ask customers the basic questions that would determine whether a rollover is in order.

The industry makes the Orwellian argument that a fiduciary standard will make it impossible for the industry to offer cost-effective assistance to the middle class. But that argument ignores the innovations in technology and business practices that already are shaking up the industry with low-cost advice options.

How effective will the new rules be? The devil will be in the details. Any changes are still a little far off: TheDepartment of Labor is expected to publish the new rules in a few months — a timetable that already is under attack by industry opponents as lacking a duly deliberative process.

Enough, already. This debate has been kicking around since the financial crisis, and an expanded fiduciary is long overdue.

MONEY Kids and Money

The High School Class That Makes People Richer

Graduates with $$ on their caps
Mark Scott—Getty Images

Kids really do benefit from learning about money in school, new data show

Most experts believe students who study personal finance in school learn valuable money management concepts. Less clear is how much they retain into adulthood and whether studying things like budgets and saving changes behavior for the better.

But evidence that financial education works is beginning to surface. Researchers at the Center for Financial Security at the University of Wisconsin recently found a direct tie between personal finance classes in high school and higher credit scores as young adults. Now, national results from a high school “budget challenge” further build the case.

Researchers surveyed more than 25,000 high school students that participated in a nine-week Budget Challenge Simulation contest last fall and found the students made remarkable strides in financial awareness. After the contest:

  • 92% said learning about money management was very important and 80% wanted to learn more
  • 92% said they were more likely to check their account balance before writing a check
  • 89% said they were more confident and 91% said they were more aware of money pitfalls and mistakes
  • 87% said they were better able to avoid bank and credit card fees
  • 84% said they were better able to understand fine print and 79% said they were better able to compare financial products
  • 78% said they learned money management methods that worked best for them
  • 53% said they were rethinking their college major or career choice with an eye toward higher pay

These figures represent a vast improvement over attitudes about money before the contest, which H&R Block sponsored and individual teachers led in connection with a class. For example, among those surveyed before and after the contest, those who said learning about money was very important jumped to 92% from 81% and those who said having a budget was very important jumped to 84% from 71%. Those who said they should spend at least 45 minutes a month on their finances jumped to 44% from 31%.

The budget challenge simulates life decisions around insurance, retirement saving, household budgets, income, rent, cable packages, student loans, cell phones, and bank accounts. Teachers like it because it is experiential learning wrapped around a game with prizes. Every decision reshapes a student’s simulated financial picture and leads to more decision points, like when to a pay a bill in full or pay only the minimum to avoid fees while waiting for the next paycheck.

Block is giving away $3 million in scholarships and classroom grants to winners. The first round of awards totaling $1.4 million went out the door in January.

The new data fall short of proving that financial education leads to behavior improvement and smarter decisions as adults, and such proof is sorely needed if schools to are to hop on board with programs like this in a meaningful way. Yet the results clearly point to long-term benefits.

Once a student—no matter what age, including adults—learns that fine print is important and bank fees add up she is likely to be on the lookout the rest of her life. Once a student chooses to keep learning about money management he usually does. Added confidence only helps. Once students develop habits that work well for them and understand pitfalls and mistakes, they are likely to keep searching for what works and what protects them even as the world changes and their finances grow more complex. Slowly, skeptics about individuals’ ability to learn and sort out money issues for themselves are being discredited. But we have a long way to go.

 

MONEY Savings

4 Surefire Strategies for Powering Up Your Savings

piggy banks of assorted colors on wood surface
Andy Roberts—Getty Images

You can't count on high investment returns forever. Take control of your future with these savings tips.

Welcome to Day 7 of MONEY’s 10-day Financial Fitness program. You’ve already seen what shape you’re in, figured out what’ll help you stick to your goals, and trimmed the fat from your budget. Today, put that cash to work.

It’s been a great ride. But the bull market that pumped up your 401(k) over the past six years won’t last forever. Even though the stock market is up so far this year, Wall Street prognosticators expect rising interest rates to keep a lid on big gains in 2015. Deutsche Bank, for example, is forecasting a roughly 4% rise in the S&P 500, far below last year’s 11% increase.

Over the next decade, stocks should gain an annualized 7%, while bonds will average 2.5%, according to the latest outlook from Vanguard, the firm’s most subdued projections since 2006.

While you can’t outmuscle the market, you do have one power move at your disposal: ramp up savings.

1. Find Your Saving Target

So how much should you sock away? This year Wade Pfau of the American College launched Retirement-Researcher.com, a site that tests how different savings strategies fare in current economic conditions. He found that households earning $80,000 or more must save 15% of earnings to live a similar lifestyle in their post-work years. While that assumes you’re saving consistently by 35 and retiring at 65, it does include your employer match, so in reality, you may be pitching in only 10% or so.

If you weren’t so on top of it by 35, you have a couple of options: Raise your annual number (Pfau puts it at 23% if you start at age 40) or catch up by saving in bursts. Research firm Hearts & Wallets found that people who boosted savings for an eight-to 10-year period (when mortgages or other big expenses fell away) were able to get back on track for retirement.

2. Think Income

New data show that people save more when they see how their retirement savings translates into monthly income, says Bob Reynolds, head of Putnam Investments. The company found that 75% of people who used its lifetime income analysis tool boosted their savings rate by an average of 25%. To see what your post-work payments will look like, check out Putnam’s calculator (you must be a client to use it) or try the one offered by T. Rowe Price.

3. Take Advantage of Windfalls

Don’t let all your “found money” get sucked into your checking account. Instead, make a point to squirrel away at least a portion of bonuses, savings from cheap gas, FSA reimbursements, and tax refunds. Eight in 10 people get an average refund of $2,800; use it to fund your IRA by the April 15 deadline, says Christine Benz of Morningstar.

4. Free Up Cash

Interest rates remain low. If you’re a refi candidate, you may be able to unlock some money that could be better used. Tom Mingone of Capital Management Group of New York suggests using your refi to pay off higher-rate debt. Say you took a PLUS loan (now fixed at 7.21%, though many borrowers are paying more) for your kid’s tuition: Pay that down.

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MONEY Baby Boomers

How to Work Less—Without Giving Up Your Career

Briefcase with fishing lures
Zachary Zavislak

It's called "phased retirement," and it's catching on.

The youngest baby boomers have just turned 50, bringing retirement within sight for the entire generation. But many boomers don’t expect to work at full throttle until the last day at the office. More than 40% want to shift gradually from full- to part-time work or take on less stressful jobs before retiring, a recent survey by Transamerica Center for Retirement Studies found.

It’s a concept called phased retirement, and it’s catching on. Last November the federal government okayed a plan to let certain long-tenured workers 55 and up stay on half-time while getting half their pension and full health benefits. Says Sara Rix, an adviser at AARP Public Policy Institute: “The federal government’s program may influence private companies to follow their lead.”

Formal phased-retirement plans remain rare; only 18% of companies offer the option to most or all workers. Informal programs are easier to find—roughly half of employers say they allow older workers to dial back to part-time, Transamerica found. But only 21% of employees agree that those practices are in place. “There’s a big disconnect between what employers believe they are doing and what workers perceive their employers to be doing,” says Transamerica Center president Catherine Collinson.

So you may have to forge your own path if you want to downshift in your career. Here’s how:

Resist Raiding Your Savings

Before you do anything, figure out what scaling back will mean for your eventual full retirement. As a part-timer, your income will drop. Ideally you should avoid dipping into your savings or claiming Social Security early, since both will cut your income later. If you’re eligible for a pension, the formula will heavily weight your final years of pay. So a lower salary may make phased retirement too costly.

Cutting back your retirement saving, though, may hurt less than you think. Say you were earning $100,000 and split that in half from 62 to 66. If you had saved $500,000 by 60, and you delay tapping that stash or claiming Social Security, your total income would be $66,700 a year in retirement, according to T. Rowe Price. That’s only slightly less than the $69,500 you would have had if you kept working full-time and saving the max until 66.

Start at the Office

If your employer has an official phased-retirement program, your job is easier. Assuming you’re eligible, you might be able to work half-time for half your pay and still keep your health insurance.

Then ask colleagues who have made that move what has worked for them and what pitfalls to avoid. Devise a plan with your boss, focusing on how you can solve problems, not create new ones with your absence. Perhaps you can mentor younger workers or share client leads. “Don’t expect to arrange this in one conversation—it will be a negotiation,” says Dallas financial planner Richard Jackson.

Without a formal program, you’ll have to have a conversation about part-time or consulting work. To make your case, spell out how you can offer value at a lower cost than a full-time employee, says Phil Dyer, a financial planner in Towson, Md.

Giving up group health insurance will be less of a financial blow if you are 65 and eligible for Medicare, or have coverage through your spouse. If not, you can shop for a policy on your state’s insurance exchange. “Even if you have to pay health care premiums for a couple of years, you may find it worthwhile to reduce the stress of working full-time,” says Dyer.

Do an Encore Elsewhere

This wind-down could also be a chance to do something completely different. Take advantage of online resources for older job seekers, including Encore.org, RetiredBrains.com, and Retirement-Jobs.com. You can find low-cost training at community colleges, which may offer programs specifically to fill jobs for local employers. Or, if you want nonprofit work, volunteer first. Says Chris Farrell, author of Unretirement, a new book about boomers working in retirement: “It’s a great way to discover what the organization really needs and how your skills might fit in.”

Sign up for a weekly email roundup of top retirement news, insights, and advice from editor-at-large Penelope Wang: money.com/retirewithmoney.

MONEY retirement planning

The Proven Way to Retire Richer

Looking for more money for your retirement? Who isn't? This study reveals that there is one sure-fire way to get it.

Last June, the National Bureau of Economic Research with professors from the University of Pennsylvania, George Washington University, and North Carolina State University, released a study entitled “Financial Knowledge and 401(k) Investment Performance”.

In it the authors found that individuals who had the most financial knowledge — as measured through five questions about personal finance principles — had investment returns that were on average 1.3% higher annually — 9.5% versus 8.2% — than those who had the least financial knowledge.

While this difference may not sound consequential, the authors noted that it “is a substantial difference, enhancing the retirement nest egg of the most knowledgeable by 25% over a 30-year work life.”

Yes, knowing the answers to five questions had a direct correlation to having 25% more money when you retire.

So what are those questions? For example, and for the sake of brevity, here are the first three:

Interest Rate: Suppose you had $100 in a savings account and the interest rate was 2% per year. After 5 years, how much do you think you would have in the account if you left the money to grow?

Answers: More than $110, Exactly $110, Less than $110.

Inflation: Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?

Answers: More than today, Exactly the same, Less than today.

Risk: Is this statement True or False? Buying a single company’s stock usually provides a safer return than a stock mutual fund.

While the questions aren’t complex, they’re tough. And few people can answer all three correctly (with the answers being: More than $110, Less Than Today, and False).

So what did those people who were able to answer those questions most accurately actually do to generate the highest returns? The authors found one of the biggest reasons was that the most financially literate had the greatest propensity to hold stocks (66% of their portfolio was in equity versus 49% for those who scored lowest). And while their portfolios were more volatile, over time, they had the best results.

This is critical because it underscores the utter importance of understanding asset allocation. This measures how much of your retirement savings should be put in stocks relative to bonds. A general guideline is the “Rule of 100,” which suggests your allocation of stocks to bonds should be 100 minus your age. So, a 25-year-old should have 75% of their retirement savings in stocks.

Some have suggested that rule should be revised to the rule of 110 or 120 — and my gut reaction is 110 sounds about right — but you get the general idea.

This vital distinction is important because over the long-term stocks outlandishly outperform bonds. If you’d invested $100 in both stocks and bonds in 1928, your $100 in bonds would be worth roughly $7,000 at the end of 2014. But that $100 investment in stocks would be worth more than 40 times more, at $290,000, as shown below:

Of course, between the end of 2007 and 2008, the stock investment fell from $178,000 to $113,000, whereas the bonds grew from $5,000 to $6,000, displaying why someone who needs the money sooner rather than later should stick to bonds. But a 40-year-old who won’t retire for another 20 (or more) years can weather that storm.

Whether it’s $100 or $1,000,000, watching an investment fall by nearly 40% in value is gut wrenching. But in investing, and in life, patience is key, and as Warren Buffett once said, “The stock market serves as a relocation center at which money is moved from the active to the patient.”

While everyone’s personal circumstances are different (my risk tolerance is vastly greater now than it will be in 30 years) knowing that you can be comfortable allocating a sizable amount of your retirement savings to stocks will yield dramatically better results over time.

TIME Innovation

Five Best Ideas of the Day: February 20

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

1. Hollywood’s diversity problem goes beyond “Selma.” Asian and Latino stories and faces are missing.

By Jose Antonio Vargas and Janet Yang in the Los Angeles Times

2. Shifting the narrative away from religion is key to defeating ISIS.

By Dean Obeidallah in the Daily Beast

3. Innovation alone won’t fix social problems.

By Amanda Moore McBride and Eric Mlyn in the Chronicle of Higher Education

4. When the Ebola epidemic closed schools in Sierra Leone, radio stepped in to fill the void.

By Linda Poon at National Public Radio

5. The racial wealth gap we hardly talk about? Retirement.

By Jonnelle Marte in the Washington Post

The Aspen Institute is an educational and policy studies organization based in Washington, D.C.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY IRAs

This Innovative Idea Could Improve Your Retirement

State governments are starting to step in to help workers save. Here's why that's a good thing.

A rare innovation in retirement saving is taking shape right now in, of all places, Illinois. In January the state became the first to okay an automatic IRA for workers at certain small businesses that don’t offer retirement plans. Those companies will be required to funnel 3% of their employees’ paychecks into a state-run Roth IRA, though workers can opt out.

It may seem surprising that Illinois is breaking ground in this area—after all, the state’s pension plans are among the worst funded in the nation. But Illinois is actually part of a broad movement. Some 30 states, including California and Connecticut, are developing similar savings programs. Says Sarah Mysiewicz Gill, senior legislative representative at AARP: “We’re reaching a critical mass of states.”

A Local Approach

Why are states taking on retirement planning? Half of private-sector employees don’t have an employer plan—a crucial tool for building a nest egg. In fact, just having access to a retirement plan through work makes a huge difference in whether you save. While 90% of those with a workplace plan have put aside money for retirement, only 20% of those without one have, according to the Employee Benefit Research Institute.

So states will face a huge drain on their budgets as workers with no savings reach retirement and need services such as Medicaid and food assistance. “If Washington were moving faster on this, the states wouldn’t have to,” says Illinois state senator Daniel Biss, who sponsored the new IRA.

No question, Congress has long dodged addressing the looming retirement crisis; it has failed to fix Social Security or create a federal automatic IRA, which President Obama proposed again in his most recent State of the Union address. Obama did introduce the myRA last year, which will allow savers without employer plans to put away as much as $15,000 in Treasury securities. But without auto-enrollment, the myRA’s effectiveness will be limited.

The Illinois program may prove to be an appealing prototype. (First it will need approval by the Department of Labor and IRS.) Still, each state is crafting its own version. In Connecticut, the automatic IRA may be paid out as a lifetime annuity or in a lump sum. Indiana is looking at setting up a voluntary plan with a tax credit. “States are a great laboratory for experimentation,” says Kathleen Kennedy Townsend, founder of Georgetown University’s Center for Retirement Initiatives.

Reason to Hope

Of course, it’s far from certain that state savings plans will make much headway: at 3%, Illinois’s minimum contribution is far below the 10% to 15% of pay that retirement experts generally recommend. And a hodgepodge of state IRAs would be less efficient and more costly than a national plan.

That said, states can sometimes get it right. State-run 529 college savings plans have helped countless families with tuition bills. The Massachusetts health care plan was a model for the national plan that has meant coverage for millions. Perhaps the states’ efforts will push retirement savings higher up the federal government’s priority list. If Illinois can lead the way on retirement, anything’s possible.

 

TIME celebrities

Here’s What Jon Stewart Wants From the Next Host of The Daily Show

"Rosewater" New York Premiere
Desiree Navarro—WireImage/Getty Images Director/writer/producer Jon Stewart attends "Rosewater" New York Premiere at AMC Lincoln Square Theater on November 12, 2014 in New York City.

He still didn't say who he thinks that host should be, though

After hosting The Daily Show for a decade and a half until recently announcing that he will step down at the end of the current season, comedian Jon Stewart wants his successor — whoever that may be — to take the show’s concept to the next level.

Stewart, speaking at Catie Lazarus’s show “Employee of the Month” at a New York pub, wouldn’t name a desired successor but explained what he would like to see from the show after he leaves, the Hollywood Reporter reported.

“What I want to see there is the next iteration of this idea,” Stewart said, adding that he used every possible permutation of the show’s concept. “I feel like the tributaries of my brain combined with the rigidity of the format.”

He used The Daily Show alum and Last Week Tonight host John Oliver (who will definitely not be succeeding Stewart) as an example of the possibilities. “John Oliver was able to apply our process to a more considered thing, and it’s exciting to watch it evolve and see it mutate and change and fill different gaps and different ideas,” he said. “That’s the part that I’m looking forward to seeing.”

As for his own plans, Stewart reiterated that he has a lot of “ideas” of his own, and that spending more time with his family is a big part of his decision to step down.

MONEY Lifestyle

The Most Surprising Thing That Will Make You Happy in Retirement

FIFTY SHADES OF GREY, l-r: Dakota Johnson, Jamie Dornan, 2015.
Chuck Zlotnick—Focus Features/courtesy Everett Collection

While financial security is important, a little sex goes a long way toward increasing happiness in retirement.

Most retirees probably aren’t as “frisky,” shall we say, as Christian Grey in the new film Fifty Shades of Grey. But new research shows that many people well into their 70s and 80s still have active sex lives, some engaging in sex at least twice a month. Tame perhaps, by Mr. Christian’s standards. But more than enough to make for a happier retirement.

We all know that diligent financial planning can lead to a more satisfying post-career life. But while money is important to retirees—especially guaranteed income they know they won’t outlive—financial security alone doesn’t assure well-being in retirement. A number of non-financial factors may also be able to increase your chances of having a more meaningful and joyful retirement, including having more sex.

A paper published last year in the Journals of Gerontology found that older married couples who had sex more frequently had higher levels of marital happiness than couples who had sex less often or had no sex at all. Which wasn’t exactly a revelation, since an earlier study (“Sex and Older Americans: Exploring the Relationship Between Frequency of Sexual Activity and Happiness”) that focused on people 65 and older, both single and married, also showed a relationship between happiness and frequency of sex, even after adjusting for health and finances.

To get this boost in happiness, the sex didn’t have to be the push-the-envelope variety portrayed in the Fifty Shades movie. Indeed, both studies set the parameters of sexual activity pretty broadly, with the Journals of Gerontology research defining sex as any activity with a partner that was sexually arousing.

But frequency does matter. In the Sex and Older Americans study, for example, only 32% of those who said they’d experienced no sexual activity during the prior 12 months felt very happy with life overall. By contrast, almost 38% who had sex at least once or twice over the previous 12 months reported that they were very happy, while more than half who had engaged in sex more than once a month reported being very happy.

I’m not suggesting that anyone should base their sex habits on these or any other studies. For one thing, it’s possible that frequency of sex isn’t what’s driving happiness. It could be the other way around. Happier people may just have more sex. Besides, how often one has sex or whether one chooses to have it at all is a highly personal matter, and thus a decision each person has to make based on his or her particular circumstances.

That said, intimacy and sex are an integral part of life. So it only makes sense for retirees to consider whether their current sex habits are contributing to a more meaningful and fulfilling life—and if not, whether this is an issue that deserves more attention.

Of course, there are plenty of other lifestyle moves that also have the potential to increase your sense of well-being in retirement. Research shows that people who cultivate a circle of friends they can rely on for companionship and support tend to be happier than those who have fewer ties with friends or family members. Similarly, staying active through occasional work or volunteering can make for a more satisfying retirement, as long as you don’t go too far and effectively turn an avocation into a job. And people who attend religious services also tend to be happier than those who don’t.

So as you’re mapping out your post-career life, by all means give financial issues all the attention they deserve. Make sure you’re saving enough, that you’re investing wisely and have a coherent retirement income plan. But do some retirement lifestyle planning as well, and make your sex life a part of it. As to how big a part, well, that’s entirely up to you.

Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at walter@realdealretirement.com.

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MONEY Saving & Budgeting

4 Ways to Hit Your Money Goals

150218_FIT_MOTIVATION
Gregory Reid

It's one thing to know that you need to save more money, find a better job, or pay down debt. It's another thing to actually do it. Employ these strategies to stay on track.

Welcome to Day 2 of MONEY’s 10-day Financial Fitness program. Yesterday, you did a self-assessment to see what kind of financial shape you’re in. Today, we help you find the motivation to take your finances to the next level.

Okay, you’ve checked your vitals, and you’re probably feeling pretty good about your starting point. According to Gallup’s annual Personal Financial Situation survey, 56% of people in households earning $75,000 or more say they are better off financially now than they were a year ago, up from 44% who felt that way in January 2014.

But just as even the most devoted gym-goer can get complacent, your financial confidence could stop you from reaching the next level. “In good economic times people save less and spend more,” says Dan Geller, a behavioral finance expert and the author of Money Anxiety. Keep the eye of the tiger even when you’re doing great. Here’s how.

1. Make a Specific Goal

When you show up at the gym without a plan, there’s a good chance you’ll shuffle on the treadmill for a half-hour and call it a day. Your financial life is no different. To boost your performance, start by zeroing in on a goal. A study by Gail Matthews, a psychology professor at Dominican University, found that you’re 42% more likely to achieve your aims just by writing them down. Indeed, people with a written financial plan save more than twice as much as those without a plan, says a Wells Fargo survey. The more specific the goal, the easier it is to tackle. Rather than plan to “cut costs,” focus on, say, paying off your mortgage five years early.

2. Buddy Up

Much as a workout partner provides motivation to get to the gym, recruiting a family member or friend to hold you accountable is a good way to stay on track. In another study by Matthews, some participants shared their goals with a friend via weekly updates—achieving their aims 33% more often than those who did not.

3. Get a Nudge

Sometimes you just need a reminder. A study by the Center for Retirement Research found that bank account holders who got reminders about their savings goals put away more cash than people who didn’t. It’s easy to set recurring calendar reminders on your PC or phone, or try a service like FollowUpThen.com, which lets you schedule emails to your future self.

4. Stickk It

Need something with more teeth? The website Stickk.com allows you to pledge a sum of money toward a goal, sign a commitment contract, and pick a friend to monitor your progress. Achieve your aim, and you get the money back. Miss it, and you lose the money, which is donated to charity or a friend.

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