Start the year with good financial habits and lay the groundwork for a healthier and more prosperous financial future. Just like working with a personal trainer to achieve physical fitness goals, working with a financial planning expert can help you improve your financial wellness and make progress towards your financial goals.
When setting goals, it’s important that they are smart. S.M.A.R.T. Specific, Measurable, Achievable, Relevant, and Timely. Tackling that last bit of debt, shoring up your emergency fund, or revisiting your household budget? A financial planner will help you build a step-by-step action plan to cross these off your list.
When building good financial habits, you first need to know and understand what tools you’re able to work with. Numerous changes have been made this year that clients can and should take advantage of to help achieve their financial goals.
Employer-sponsored retirement plans, such as 401ks, 403bs, and most 457s have all benefited from increased contribution limits for this year. Now is a great time to consider increasing your savings contributions to these types of accounts to take advantage of these higher contribution limits. If you receive a bump in pay or a bonus, consider increasing your retirement savings into these accounts.
IRA’s and HSA’s contribution limits have increased as well. Some good news for those who missed the opportunity to contribute the maximum amount last year, you still have up until the April tax filing deadline to do so. If you make use of automated monthly contributions into these accounts, you may want to increase these amounts to ensure you take full advantage of these higher contribution limits. Other notable increases this year are the annual gift tax exclusion amount and lifetime exemption amount. Speak with your tax professional to ensure you are taking full advantage of these increases.
If you have an inherited IRA, be aware that there are updated rules for taking distributions from those accounts. If you inherited an IRA after 2020, you would need to begin taking your Required Minimum Distributions, subject to the 10-year rule. Ensure you understand the updated distribution rules and be aware of the penalties for failing to follow them.
There are other considerations to make outside of savings towards your retirement as well. Recent changes to 529 plans have added big advantages to funding them for a child’s future education needs. If a child doesn’t end up using all of the money for their qualified educational needs, the excess funds can be repurposed towards their retirement. They can be contributed via rollover into a Roth IRA up to $35,000 for the benefit of the child.
You may have experienced big life changes over this past year. Changes in family status, additions to the family or the loss of a loved one can all impact your financial picture. Review your beneficiaries on all your accounts to make sure they are all current and in alignment with your wishes. Should something happen to you, it’s critical that your assets have a plan and a place to go.
At Vision Capital, our mission is to improve financial wellness. Our team of investment professionals and financial planning experts work together to provide guidance and expertise in investment management and financial planning. Contact us to learn more about how we work with our clients to support them along their financial journey and improve their financial wellness.
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