The new year has arrived, and many of you probably made some resolutions to accomplish certain changes in your life. As your financial advisors, we of course hope that you considered your finances when planning for those changes. Whether you know your situation needs a bit of work, or you\’re in pretty good standing already, almost everyone can always find room for improvement.
We recommend that you consider the following three goals this year…
Lower your debt (or get out completely). Did you know that the average American consumer carries $9,600 in credit card debt? Most people are making payments on revolving debt, rather than paying off balances each month, and over time you could spend hundreds or even thousands on interest! Sit down and make a plan to get out of debt this year. Perhaps you can devote your tax refund to the cause, or your next big bonus can make a dent in your bills. If necessary, consider options like a consolidation loan or working with a debt counselor.
Increase your retirement savings rate. The IRS raised maximum allowable contributions just slightly, so now you can a bit more for retirement. The limit for 2018 is $18,500, or $24,500 if you\’re over age 50 and making catch-up contributions.
Remember, you earn a valuable tax break for contributing to a qualified retirement plan. So you\’re not only preparing for the future; you\’re saving yourself money each year that you contribute! If you\’re not set to contribute the max amount this year, visit your human resources department and increase your paycheck withholding a bit.
Open an Individual Retirement Account (IRA). Let\’s assume you\’re already on track to make the maximum allowable contribution to your 401(k) this year. That doesn\’t mean you can\’t save even more for retirement! Consider an IRA so that you can better prepare for the future. If you go with the Roth option, you can save after-tax money now, and enjoy tax-free income in retirement. For some people, that is a good strategy to manage income taxes for the future.
For more information on these ideas, or any other financial objectives you might have, give us a call. We can help you analyze your priorities and make a plan to achieve your goals.