10 Financial Actions To Take in the New YearSubmitted by Reviresco Wealth Advisory on December 27th, 2017
When you watched the New Year’s Eve countdown and raised your glass to 2017, did you make any resolutions to put your finances first this year? Finance-related resolutions are the third most popular New Year’s resolution, following self-improvement and weight loss. (1) Millions of people strive to get out of debt, save more, or accomplish a financial milestone, whether that’s purchasing a vacation home or retiring. If you fall into this camp, how did you do? Did your resolution fall to the wayside, as many do?
Now is the time to make some headway on your 2018 goals. Here are 10 actions to jumpstart your financial plan in 2018 and beyond.
1. Maximize Your Retirement Savings
If possible, increase your contribution to your 401(k) by the end of the year to make the most of your retirement savings. For 2017, you can contribute as much as $18,000 (or $24,000 if you are 50 or older). You may also consider contributing to a Roth IRA. For 2017, you can contribute as much as $5,500 (or $6,500 if you are 50 or older). Keep in mind that if your income is over $196,000 and you’re married filing jointly, you won’t be eligible to contribute to a Roth IRA.
2. Use Up Your 2017 Medical and Dental Benefits
Did you have good intentions of taking care of some dental work, blood tests, or other medical procedures? Now’s the time to take advantage of all your healthcare needs before your deductible resets. Dental plans in particular often have a maximum coverage amount. If you haven’t used up the full amount and anticipate any treatments, make an appointment before December 31st.
3. Verify Expiring Sick and Vacation Time
Depending on your company, your sick or vacation time might expire at the end of the year. Check with your HR department to learn about any expiration dates. If your sick or vacation time does expire, fit in a last-minute vacation, a staycation, or trips to the doctor to use up these benefits.
4. Use Your Flexible Spending Account
Like your health insurance benefits, you’ll want to use up your FSA (Flexible Spending Account) dollars by the end of the year. Your benefits won’t carry over and you’ll lose any unspent money in your account. Check the restrictions for your account to see what the money can and cannot be used for.
5. Double Check RMDs
If you’re retired, review your retirement accounts’ required minimum distributions (RMDs). An RMD is the annual payout savers must take from their retirement accounts, including 401(k)s, SIMPLE IRAs, SEP IRAs, and traditional IRAs, when they turn 70½. If you don’t, you may face the steep penalty of 50% of the distribution you should have taken. To calculate your RMD, use one of the IRS worksheets.
6. Stay on Top of Charitable Contributions
If you made a charitable contribution in 2017, you might be able to lower your total tax bill when you file early next year. It can be especially advantageous if you donated appreciated securities to avoid paying taxes on the gains. Along with your other tax documents, find and organize any receipts you have from your donations to charities, whether it was a cash, securities contribution, or another type of gift.
7. Consider a Roth Conversion
Roth IRAs are attractive because you don’t pay income tax when you withdraw funds in retirement. However, if you’re a high-income earner, you may not be eligible to contribute and, instead, invest in a Traditional IRA. If you have a Traditional IRA, you may have the opportunity to convert to a Roth IRA and save money on taxes in the long run. The deadline to convert to a Roth IRA is December 31st, so if you’ve been considering doing so, or wonder if it’s an appropriate option for you, talk to your financial advisor ASAP.
8. Review Your Insurance Coverages
A lot can happen in a year. As you experience life changes, from the birth of a child to marriage to a new career, it’s important to regularly review your insurance coverages and your designated beneficiaries. Now is the ideal time to review your current insurance policies and make sure they are up-to-date. You might also want to evaluate your need for other types of insurance you may not currently have, such as long term care insurance.
9. Set a Budget for Holiday Spending
Americans will spend nearly $1,000 this year on holiday gifts alone. (2) During such an expensive time of year, a budget is a must to avoid overspending. Break down your spending and allocate a set amount of funds for everything you need this holiday season, including gifts, food, transportation, postage, and gift wrap. Be realistic about what you can afford to spend.
10. Give Without Gift Tax Consequences
It’s never too early to start planning the legacy you want to leave for your loved ones without sharing a good portion of it with Uncle Sam. You may want to consider gifting. Each year, you can gift up to $14,000 to as many people as you wish without those gifts counting against your lifetime exemption of $5 million. If you’ve yet to gift this year or haven’t reached $14,000, consider gifting to your children or grandchildren by December 31st.
Do you have questions or need help with your 2018 financial plan? Call 858-724-2444 or email firstname.lastname@example.org if you want the help of an experienced professional as you follow through on your resolutions.
Ian Maxwell is a financial advisor and the president and CEO of Reviresco Wealth Advisory, an independent, fee-based firm dedicated to providing investment management and strategic wealth planning based on fiduciary standards. Providing comprehensive financial planning and asset management, Ian focuses on serving successful pre-retirees who want to ensure the assets they’ve worked hard to build work for them in return during retirement. He is passionate about improving the quality of life for his clients and developing innovative solutions that help people reconsider how to best achieve their financial goals. Based in San Diego, California, he works with clients locally, as well as in Northern California in the San Francisco area. To learn more, connect with Ian on LinkedIn, or send him an email at email@example.com.
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