It seems like just yesterday that little ghosts and goblins were knocking on your door, asking for candy. Now we’re eyeing Thanksgiving dinner and even making plans for New Year’s Eve. Where did the time go? We’re all in a rush with our end-of-year festivities, but during the next month or so, take time to evaluate your financial matters. In particular, there are three things you might need to do before the end of the year.
Max out your retirement savings. Saving for retirement sets you up for a more confident future, but it can also earn you a valuable tax deduction now. But you have to make those contributions to your company-sponsored retirement plan before the end of the year. So, before December 31, evaluate the year’s savings. Try to reach the maximum contribution of $24,500, or $32,500 if you’re over 50 and making catch-up contributions (or up to $35,750 if you’re age 60 to 63).
The associated tax deduction can meaningfully lower your tax bill in the spring! And if you’ve already maxed out your 401(k) contributions, consider stashing additional funds in an IRA. You can save another $7,500 for retirement each year (or $8,600 if you’re 50 or older).
Evaluate your retirement plan. Yes, you’ve already set a retirement goal, but how long ago was that? If you haven’t reevaluated it recently, you should double check your plans. Sound retirement planning requires ongoing assessment and alterations to your strategy. Consider the future impact of inflation, assuming a rate of 3 or 4 percent to be safe. An inflation rate of just 2 percent could leave retirees with a budget shortfall of 73,000 over 20 years.
Examine your investments. Your financial abilities, needs, and priorities will likely change over time. If you haven’t balanced your portfolio lately, your current mix of investments might not reflect your current and future reality. Give us a call, and we’ll help you reevaluate your investment strategy, so that we can decide whether any adjustments need to be made before the new year.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.