Helpful miscellaneous articles
regarding our retirement plan and planning.
Like you, I review my retirement nestegg and plan from time to
time. Recently, I went though some continued
education for some credentials I maintain and it occurred to me that we all
could use a review about these issues.
So with your help, we will share and post articles and info that may be
helpful and of interest to many of you in this section.
Don’t ‘just set it and forget it’ on money goals, advisor says: 5
steps for a mid-year financial checkup
PUBLISHED THU, JUN 13 20248:00 AM EDTUPDATED THU, JUN 13 20241:42 PM EDT
Five steps for a mid-year financial checkup
With half of 2024 in the rearview mirror and the second half on
the horizon, you may be able to give yourself a pat on the back for sticking to the financial goals you set at the start of the year — or, maybe, discover that
you’ve veered off track.
Either way, now is a good time to do a “financial checkup.”
“If you set a goal, ‘just set it and forget it’ doesn’t work,” said
certified financial planner Jaime Eckels, a wealth management partner at Plante
Moran Financial Advisors in Auburn Hills, Michigan.
“You need to have accountability and you need to check in,” she
said. “It doesn’t have to be every two weeks. It doesn’t have to be every
month, but a mid-year checkup is a perfect time to kind of revisit everything.”
More from
Your Money:
Here’s a look at more stories on how to manage, grow and protect
your money for the years ahead.
Giving yourself a financial checkup involves taking a holistic
view of your finances — including your cash flow and debt, savings and
retirement accounts, as well as insurance coverage and estate plan.
Here are five steps to take:
Review
your cash flow
Start by tallying the money coming into and going out of your bank
and other financial accounts.
When reviewing your monthly spending and savings, check whether
you have more money going into your bank accounts than you do coming out. That
should be the case, according to experts.
Still, it’s difficult for many Americans to cover all of their
daily or monthly expenses with their paycheck. Some have dipped into their savings or turned to credit cards to buy groceries. To avoid piling on debt,
pay close attention to the unit price of groceries to find the cheapest items.
And if you can, use cash or a debit card at checkout to avoid taking on debt
for everyday spending.
You also may need to dial back dining out and other discretionary
purchases. Stick to necessities for the next month or so and see if your cash
flow improves.
Focus
on high interest rates
High interest rates can be a challenge and an opportunity.
“With rates near 20-year highs, it’s important to review any
outstanding high-interest debt you may have — like credit cards or other types
of loans — and focus on paying down those balances first,” said Terry
Rasmussen, president and CEO of Thrivent, a Minneapolis-based financial
services provider.
Credit card holders with an account balance have an average interest rate of
about 23%, according to Federal Reserve data. If you are carrying a balance,
reduce your credit usage and work on paying down the debt to lessen that
burden. Making these moves can help improve your credit score — and potentially
lower the card rate you may qualify for in the future.
“On the savings side, higher interest rates mean that high-yield
savings, money market accounts, and CDs may have greater upside than usual,”
Rasmussen said.
The average annual percentage yield, or APY, for a savings account
is 0.58%, according to Bankrate, but high-yield
savings accounts average about 4.88%.
Boost
emergency and retirement savings
Ideally, you should have three to six months of living expenses saved in an emergency fund. If you dipped into that account
to pay for car or home repairs or another
unexpected expense, now is the time to figure out how you can turbocharge your
savings — or at least get back to a regular savings strategy.
“The nice thing is you’re getting 4.5% to 5% on your cash right
now” in many high-yield savings accounts, Eckels said. “So people should be
feeling a little bit better about keeping cash on hand and keeping that money
in emergency reserve.”
Make sure that you are contributing enough money to your 401(k)
plan or workplace retirement plan to get the company’s matching contribution.
You don’t want to leave that free money on the table. The maximum employee contribution to
a 401(k) plan this year is $500 more than 2023 at $23,000, or $30,500 if you’re
50 or older. For those who fall into a higher tax bracket, some experts suggest
boosting pre-tax retirement contributions to reduce taxable income.
If you don’t have a workplace retirement plan, you can open a
traditional or Roth IRA on your own through your bank or brokerage. The maximum
IRA contribution for 2024 is $7,000, or $8,000 if you’re 50 or older. Again,
that’s $500 higher than last year.
Tackle
taxes early
It’s not too early to take some steps now to lessen your potential
tax hit for the year. Use the tax withholding calculator on the IRS website to
make sure you’re having the right amount of taxes withheld from your paycheck.
“If you owed a lot in 2023, consider increasing your federal
withholding by updating your Form W-4,” said David Peters, founder of Peters
Financial in Richmond, Virginia. “This can prevent surprises next April.”
Peters is a certified public accountant and a CFP.
And, if you’re self-employed or a part-time worker receiving
income that does not have taxes withheld, make sure you’re making adequate
quarterly estimated tax payments. If you don’t pay enough estimated tax on your
income or pay it late, you may have to pay a penalty even if the IRS owes you a
refund.
Protect
your assets
As you assess your financial well-being, consider not only your
current money situation but also how you can protect what you have.
Make sure your health, life and disability insurance coverage
align with your current needs and circumstances. Also, double-check the
coverage limits on your home and auto insurance policies.
“Explore any discounts or bundling options that may be available
from an insurer to optimize your insurance costs and benefits,” Rasmussen
said.
The ultimate goal, she added, is to “ensure that your policies
adequately protect your assets, provide sufficient liability coverage, and
provide for your family should the unthinkable occur.”
(As with any of these informative articles,
anyone who needs someone to talk to about
this
very subject contact me and I can direct you to a knowledgeable advisor).
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