10 simple actions for the New Year

1 - If you have outstanding short-term debt, particularly variable rate debt, make a plan to get it paid as soon as possible. Make a budget, apply funds to the highest interest rate debt first and when that is paid apply the freed payment to the next highest rate debt. As cards are paid, consider shredding all but one card and closing outstanding lines.

2 - In conjunction with the above, if you have reserves that are less than 3 months’ expenses, make a plan to commit to shore these up to at least that amount (and up to 6 months’ expenses).

3 - If you have more than a normal cash reserve still earning close to 0% at a bank, consider using certificates or high yield savings accounts that can pay more than 4%* in today’s environment.

4 - Review your homeowners', property and life insurance policies to make sure you have adequate coverage.

5 - If you are saving in employer-based plans, consider increasing the percentage saved by 1% - you won’t miss it. Also, particularly if you are under age 45 and if you are saving in employer-based plans, consider a switch to a Roth option vs. a pre-tax option if you have the option. It’s likely to be more tax-effective in the long run, particularly if you are maximizing contributions.

6 - If you are a business owner and are contributing to a SEP or SIMPLE IRA, consider taking advantage of the new SECURE Act 2.0 provisions that allow for Roth contributions.

7 - If you are over age 73 and need to take Required Minimum Distributions, consider taking them early in the year with markets at or near all-time highs. If you don’t need the funds you can reinvest in non-qualified accounts. You can also directly charitably gift the RMD amount and avoid taxation.

8 - If you have never done so, consider working with a financial advisor to establish a retirement plan, using expense assumptions, social security and pension estimates, retirement plan balances and projections, inflation and life expectancy assumptions to determine how and when you can retire and to what extent changes in preferences or assumptions can impact that.

9 - If you are interested in multigenerational planning, consider opening and funding (or matching contributions) a Roth IRA for your young adult child (or grandchild!).

10 - Particularly if it’s been a few years or if you’ve had life changes, review your estate plan and beneficiary designations on assets to ensure they still meet your wishes.

* As of 11/08/2024