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Saving for retirement a top New Year's resolution

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It’s getting to be that time again for New Year’s resolutions, the annual effort that often ends in futility. However, a new survey finds more Americans have rearranged their objectives for 2012 from surviving to thriving.

To be sure, saving more and spending less have held the top two spots in the annual Fidelity Investments survey of resolutions. And, paying off debts jumped this year into the third spot on the list up from No. 7 last year.

But saving and investing for retirement has become the most focused part of plans for 2012, with the median savings target of $2,400, double the amount people hoped to save this year.

The emphasis — 62 percent — is on long-term goals like retirement, with the rest targeting short-term objectives like household repairs and building an emergency fund.

The Fidelity report also finds the saving habits of households are linked directly to the economy. If things are not going well, people have a tendency to avoid saving. Yet 85 percent of people said their current behavior is likely to continue as the economy improves.

Like any other habit, investing is best done without a conscious effort. That is why the easiest way to build a retirement nest egg is to put it on automatic pilot. Using an employer-sponsored retirement plan, like a 401(k), make saving and investing easy. In 2012, you may be able to contribute up to $17,000 to such a retirement plan. That is up $500 from this year.

If your employer also matches a portion of your contributions, as is increasingly more likely these days than it was a couple of years ago, it makes it almost mandatory you set money aside.

Of course, setting money aside is the first step; making wise investment choices is next. Most retirement plans offer a menu of mutual funds for employees to choose from to allocate their contributions. History shows that most people are way too conservative in making fund choices. So look at the options and consider which funds fit into your goals and objectives based on time horizon and tolerance for risk.

“I think the stock market is already priced for a recession, maybe even a hard recession," said Fidelity’s Lisa Emsbo-Mattingly, director of asset allocation research. "But if the U.S. economy does not slip back into recession, then stock valuations look compelling.”

Fidelity also puts a real wild card on its list of 12 ways to save more and spend less in 2012: consider purchasing a second home.

“If you can afford the purchase, now may be the time, as home prices in many parts of the United States have not been this cheap in decades,” according to the Fidelity report.

The report suggests there are tax benefits from owning a second home, whether as a vacation property or for investment purposes. Of course, speak with a tax professional.

Bottom line, great wealth is often created at times like these, and people who are willing to invest in an organized and efficient manner can often reap benefits missed by others who stay on the sidelines.

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