Published by Daniel Morrison, Wealth Advisor
As we approach the year’s end, in the midst of all the holiday hustle and bustle, the last thing you want to think about is taking care of your finances. But since finance-related resolutions take third place for most popular New Year’s resolution, (1) why don’t you give yourself a head start on your 2019 financial goals? Here are 5 critical financial actions you’ll be glad you tackled when the ball drops on New Year’s Eve!
1. Amp Up Your Retirement Savings
If possible, max out your contributions to your 401(k) by the end of the year in order to make the most of your retirement savings. For 2018, you can contribute as much as $18,500 (or $24,500 if you are age 50 or older). Remember, these contribution limits apply to you, and any contribution matched by your employer is on top of this amount.
You might also consider contributing to a Roth IRA. For 2018, you can contribute as much as $5,500 (or $6,500 if you are age 50 or older). However, keep in mind that if your income is over $199,000 and you’re married filing jointly, you will not be eligible to contribute to a Roth IRA.
No matter the route you take to save for your golden years, be sure to finish the year strong by maximizing your contributions and investing in your future!
2. Take Advantage Of Your Employer Benefits
While every employer has different rules pertaining to the benefits they offer to their employees, many benefits expire or reset at the end of the year. You work hard for these accommodations, so be sure to use them!
- Medical And Dental Benefits
At the beginning of 2018, did you have good intentions of marking off some dental work, blood tests, or other medical procedures lingering on your to-do list? 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 it a priority to set an appointment before December 31st.
- 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 simply lose any unspent money in your account. Check the restrictions for your account to see what the money can and cannot be used for, and take care of any needs you have that fall on the acceptable list.
- 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 or even a staycation. If you have the need to make any trips to the doctor in the near future, schedule those appointments now to use up these benefits before you lose them.
3. 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 meet these minimums, you may face the steep penalty of 50% of the distribution you should have taken. If you don’t need your RMD money to live on, consider donating the funds to a worthy cause, which could also lessen your tax burden for the year. To calculate your RMD, use one of the IRS worksheets.
4. Update Your Gifting And Estate Plans
If you have taken the time and energy to create an estate plan, you’ll want to check in periodically to ensure all the documents are up to date and no major details have changed. Any significant life event is a good time to review and update your estate plan documents. And if you change any of the beneficiaries in one place, such as a life insurance policy, make sure that they are consistent with the other documents so that there is no confusion.
If gifting is one of your long-term financial goals, it’s never too early to start planning for the legacy you want to leave your loved ones without sharing a good portion of it with Uncle Sam.
Each year you can gift up to $15,000 to as many people as you wish without those gifts counting against your lifetime exemption of $5.6 million. If you’ve yet to gift this year or haven’t reached $15,000, consider gifting to your children or grandchildren by December 31st.
If you made a charitable contribution in 2018, 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.
5. 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.
Get Started Now!
As we prepare to turn the calendar and welcome a new year, give yourself a financial checkup and make the changes necessary to set yourself up for a successful 2019. Do you need to take any of these steps before the ball drops on New Year’s Eve? Our team of professionals here at Jacob William Advisory are eager to help you finish the year off strong! Contact our office by calling 410-821-6724 or emailing firstname.lastname@example.org. You can also take our Risk Tolerance Questionnaire at https://client.jacobwilliam.com/survey/.
Daniel Morrison is the co-founder and Wealth Advisor of Jacob William Advisory, a wealth management firm whose sole mission is to service their clients’ needs beyond their expectations. Dan Morrison has 27 years of industry experience, and for the past decade, he has been committed to building Jacob William Advisory into one of the foremost wealth advisory firms. Dan graduated from the Towson University with a bachelor’s degree of finance in economics and obtained his master’s degree in finance from the University of Baltimore. He is a CERTIFIED FINANCIAL PLANNER™ professional and holds the designations of Chartered Financial Consultant® (ChFC), Chartered Life Underwriter (CLU), and Chartered Advisor for Senior Living (CASL). He and his wife Beth reside outside of Baltimore, Maryland, and have three wonderful children. Dan is involved in his church and is a board member for Believe Big, a charity whose mission is to help families navigate the cancer journey. He enjoys spending time with his family, playing golf, and sailing. A good book is also never far from his reach. Learn more about Dan by connecting with him on LinkedIn.