At the start of the year, it’s a great time to make a resolution to take care of your financial health. A good start? Review your paystub, employer provided benefits and overall financial plan:
- Will you turn age 50 in 2023? Include the $7,500 annual catch-up contribution in your 401k and 403b salary deferral.
- Will you turn age 55 this year? Include the $1,000 annual catch-up contribution in your Health Savings Account (HSA) contribution.
- Be sure to max your 401k salary deferral throughout the year, $22,500 ($30,000 with catch-up contribution).
- If your salary is paid monthly, then set the deferral to $1,875 ($2,500 with catch-up) per monthly paycheck.
- if your salary is paid bi-weekly, then set the deferral to $865 ($1,154 with catch-up) per bi-weekly paycheck.
- Do you fund the max amount to your IRA each year? For 2023 the contribution limit has increased to $6,500 ($7,500 with catch-up contribution).
- Budget $542 ($625) per month when funding your IRA monthly.
- Have there been any life changing events this past year or expected in the next year – such as a change in marital status or the birth of a child.
- Review your designated beneficiaries listed on your 401k/403b plan and IRA’s and adjust accordingly.
- If you plan to enroll your newborn in a childcare facility, sign up for your company’s pre-tax Dependent Care Flexible Spending Account. The max amount you can fund annually to this employer sponsored plan is $5,000 per family.
- Review if changes need to be made to your company sponsored health insurance plan or other employer benefits offered.
- Do you typically owe significant taxes or receive a significant tax refund each year? You may want to consider adjusting your Form W-4 with your company’s HR. Please contact your tax preparer if you need assistance making changes to your withheld taxes from pay.
- Are you continually putting off funding your child’s 529 plan each year? Set up an amount to fund into your child’s 529 plan via monthly auto withdrawals from your bank account.
- Make a plan to update or create your estate plan (will, healthcare proxy, beneficiary designations, etc.) with an estate attorney.
- Will you be retiring this coming year or turning age 65?
- If retiring this coming year, discuss with your financial planner when it would be best to begin taking Required Minimum Distributions (RMDs) from your retirement accounts and at what age to begin collecting social security benefits.
- When turning age 65 you are eligible to sign up for Medicare. Your “Initial Enrollment Period” lasts for 7 months and begins 3 months before your 65th birthday and ends 3 months after the month your turn 65.