This year has certainly flown by, and before long we’ll be watching the ball drop on New Year’s Eve. But before you get too busy with shopping, traveling, and party planning, remember to schedule some time to monitor your finances. In fact, there are three very important things you should do before the end of the year. Some financial decisions are time-sensitive, so pencil these item into your calendar!
Make the maximum contribution to your retirement account. As you know, saving for retirement doesn’t just set you up for a secure financial future. Contributions to an employer-sponsored retirement fund can also earn you a valuable tax deduction. But you have to make those contributions before the end of the year, in order for them to count, so gather your statements to see where you stand this year.
Try to reach the maximum contributions of $18,000 for the year, or $24,000 if you’re over 50 and making catch-up contributions. You can earn up to $4,500 in tax deductions, and you’ll surely appreciate that savings in the spring! Remember, also, that if you’ve already maxed out your 401(k) contributions for the year, you can save additional money for retirement by opening and funding an IRA. This will help you save an additional $5,500 each year.
Reevaluate your retirement plan. Did you set a retirement savings goal years ago? If so, you can’t assume that plan will still work for you when you reach age 65 (or whenever you plan to retire). Sound retirement planning requires ongoing assessment and alterations to your strategy. Consider this fact: An average inflation rate of just 2 percent could erode your retirement plan over 20 years, leaving you with a budget shortfall of $73,000! Ouch.
Examine your investments. Your portfolio should reflect your financial needs, abilities, and priorities, but these things can change over time. If you haven’t balanced your portfolio lately, it might not line up with your current reality. Call us to schedule an appointment, and we can help you decide if your investment strategy needs an adjustment.