New York Estate Planning & Elder Law Blog
As the new year begins, new opportunities are created for people to make the most out of their finances. Currently, the country is proceeding through the “Great Reshuffle”, which is seeing a large number of workers leave their jobs and make new ones. While many workers want to do their best to save as much as they can, some people are finding it hard to save and reach financial goals. This article reviews some of the important things that you can do to make the most of your finances in 2022 and beyond.
# 1 – Examine Existing Retirement Plan Contributions
This year, 2022 workers can contribute as much as $20,500 to a 401(k) or make similar contributions to 403(b) plans and many 457 plans. This is $1,000 greater than the limit established in 2021. If you’re at least 50 years old, you can also add another $6,500 in “catch-up” contributions.
# 2 – Consider Contributing to Both Roth and Traditional Accounts
One important choice to make is whether to place pre-tax money in a traditional retirement account or to pass on after-tax dollars to a Roth IRA. One method to help determine your financial decision is your age as well as your income. If you are in a lower income tax bracket or younger and tax savings are not currently important to you, it’s likely a better idea is to place your money in a Roth account. If you are in a higher income bracket, pre-tax savings might prove more valuable.
# 3 – Increase Automatic Account Contributions
Whether you’re placing funds into a traditional or Roth account, it’s a good idea to review what your automatic contributions are. It’s also a good goal to try to increase your automatic contributions by 1 or % or at least enough to receive your company’s matching contributions even if you cannot fully fund the account.
# 4 – Try to Obtain the Employer Match
It’s great to strive to place a great amount of money into your 401(k), but for some workers, it’s impossible to achieve these goals. As a result, remember it’s not always possible to obtain the maximum contribution limit. If you’re unable to receive the maximum contribution, you should do your best to receive the employer match and slowly begin to increase how much you contribute to your 401(k) account.
# 5 – Examine the Target Date Funds for Rebalancing
You should take the time to rebalance your portfolio so you’re taking on more risk than necessary. Due to the S&P 500 Index rising greatly in 2021, many estate planning professionals have a greater percentage of retirement money placed in equities than they planned to meet retirement goals.