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We’re almost two months into 2026, but it’s never too late to set (or reset) your financial goals. And now we are well past the busy holiday season, it may be easier to think clearly about the “need-to-dos” and “nice-to-haves” to create a financial plan.
The key is to start whenever you’re ready and to focus on building a realistic plan you can follow over the next 12 months (or any time frame that makes sense for your life).
One helpful way to begin is by choosing a single word as your guiding theme, instead of a long list. It can be anything — just identify what’s most important to you.
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Maybe it’s health: This year, you want to get in better shape, improve your mental health and strengthen your financial resilience.
Or perhaps this is the year defined by education as you look to become more financially savvy and save for your children’s college expenses.
Whatever your personal goals, keep that theme word in mind. If you don’t pick a destination, you’re not really going anywhere, so first find that North Star.
But to make real progress toward it, you’ll need to make a road map.
To do that, and to guarantee that you end the year further along than you started, identify three concrete steps toward your theme to spread across the year, each one building on the last.
This process will be the same regardless of your goals, but to illustrate it, let’s focus on the theme of “retirement” — because it’s the most important thing to get ahead on, and the easiest thing to put off for another year.
Step No. 1: Set up an early win
Once you’ve determined your theme, figure out the easiest step on that journey. If you can guarantee yourself a win here, you’ll not only end up with tangible results — you’ll have proved to yourself that you’re capable of making progress toward your financial goals.
Often, the reason we struggle is that we’ve become used to letting ourselves down. So make a promise to yourself and keep it. Learn to trust yourself again.
For retirement planning, there are three big considerations:
- How much will I need?
- How will I spend it?
- What legacy can I leave?
Rather than thinking of this as a single, overwhelming goal, spread the steps across those considerations. The first is about clarifying what you’re aiming for.
It’s tempting to want to focus on reaching your “number” — or the dollar amount you’ll need to save to retire. But there’s little point in thinking up a number for its own sake. What’s most important is thinking about the life you want to live in retirement.
For example:
- Where do you plan to live — in the U.S. or abroad?
- What income sources will be available to you?
- When does it make sense to claim Social Security, knowing that even a few years’ delay can meaningfully increase lifetime income?
- What do you think your health will look like?
- What hobbies do you plan to pursue in retirement?
Adjusting your plans in line with the answers to these questions could be your first step.
Step No. 2: Develop an overarching strategy
Your next goal should be a bit more ambitious.
You might already have your map to retirement. But what about through retirement?
Consider the statistic that on Mount Everest, more accidents happen on the way down than they do on the way up. We have oriented our mindset to say that building our nest egg is the hard part. That’s true, but spending it down can be equally tough.
Whether you’re 35 or 75, it’s essential to build an income distribution plan and test it against your estimates of factors, including taxation and living expenses.
As a hypothetical example, let’s say you have a retirement account, an investment account and an annuity, which together give you $2 million to draw from.
- How much and from which of those accounts do you withdraw money to live comfortably?
- Are you taking a little from each account every month?
- If you are, what amount should you take?
The decisive factor here is the taxation of your withdrawals. Taking that money from a traditional IRA is the least tax-efficient option, for example, because every dollar is taxed at the ordinary income tax rate.
Paying attention to how your retirement assets are taxed, and spending them strategically, can make a huge difference in how much income you can have in retirement.
You don’t want to relax and say, “I’ve made it because I have $2 million.” Getting to that number is only half the journey, so start planning how you will turn your savings into income as efficiently and effectively as possible.
Step No. 3: Make progress on long-term plans
For the third step in your 2026 plan, you want to take on your furthest-reaching goal. In this example, that could be leaving a legacy to your loved ones or a cause that’s important to you. This means moving past step two to figure out what assets you can pass on.
You might organize your will and estate planning documents. According to one study, fewer than a quarter of Americans have a will, and a quarter of those who do have never updated it.
Your goal this year might simply be engaging an attorney. From there, you could have everything done within three months — but you have to take that first step.
Tax efficiency can be important here, too.
For example, proceeds from a life insurance policy are not taxed when the death benefit is paid. This makes it a tax-efficient way to pass on wealth.
You should be careful not to spend the cash inside a life insurance policy down to zero and eliminate that benefit because loans and withdrawals from cash value life insurance reduce the policy’s cash value and death benefit and increase the chance that the policy may lapse.
There are also investment vehicles that you shouldn’t pass on to your heirs.
For example, an IRA can be the least tax-efficient way to pass money on because, as mentioned above, traditional IRAs are taxed as ordinary income by heirs when they seek to access that money.
Finding your financial North Star
“Retirement” is just one example of how you might approach a theme. If you’re having trouble coming up with yours, try thinking beyond, “How much money do I have?”
Think:
- “How secure do I feel in my ability to spend it?” (“Security.”)
- “Do I have an emergency plan?” (“Emergencies.”)
- “Do I have financial reserves?” (“Resilience.”)
Answers to questions like these could help clarify your priorities over the next 12 months.
