With 2022 drawing to a close, now is the perfect time to get your finances in order, maximize your tax savings, and make sure you’re on track to achieve your goals — professionally, personally, and financially. We’re here to help with an end-of-year checklist that will help you take care of all your financial housekeeping before the end of the year. While not everything on here will apply to you, it’s a good resource to make sure you haven’t forgotten anything important!
REVIEW OR UPDATE YOUR BENEFICIARY DESIGNATIONS
Make any needed updates to the beneficiary portion of your bank accounts, retirement accounts, life insurance policies, and annuities.
Have you gotten married or had a child within the last 12 months? Or perhaps a loved one has exited your life through a divorce or a death. Choosing a beneficiary for your life insurance policy is a decision you should consider carefully, it is especially important because beneficiaries trump who’s named in a will.
REVIEW YOUR TAX WITHHOLDINGS
Review your tax withholdings and payments. Big events in the last year — such as marriage, divorce, or having a child — are good reasons to adjust your withholding.
Check out the Tax Withholding Estimator from the IRS. It’s a handy tool for everyone — employees, retirees, and the self-employed — who wants to effectively tailor how much income tax to withhold.
MAX OUT YOUR RETIREMENT CONTRIBUTIONS
In 2022, you can sock away $20,500 ($22,500 for 2023) in your 401(k) or other employer-sponsored retirement plan, plus an extra $6,500 ($7,500 for 2023) in “catch-up” contributions if you’ll be at least age 50 this year.
If you freelance or are self-employed, your limits are even higher: up to $61,000 for 2022 ($66,000 for 2023) or 25% of your qualifying income, whichever is less, if you have a Simplified Employee Pension (SEP) Opens in new window plan IRA. If you don’t, there’s still time to set one up to take advantage of the tax benefits.
REVIEW YOUR INSURANCE NEEDS
Health insurance, life insurance, homeowners or renters insurance, auto insurance, and even the commercial insurance for your small business are all important to review annually. Have you grown your family this year? Bought a house? Started a business? The insurance coverage you had at the start of the year may not be enough for your needs in the new year. Make sure you have the coverage you need and that better pricing is not available. At Roman Insurance Services we will review all of your coverage with you, at no charge, whether or not you purchased your insurance through us. Email us to schedule a few minutes to discuss your coverage.
THINK ABOUT YOUR LEGACY GOALS
Estate planning isn’t only for the very old and very wealthy; there are things you can do at every stage of life to make sure your family’s hopes and dreams are realized.
Start with the basics:
• If you don’t have a will, draw one up. If you already have one, make sure it’s up to date.
• Consider naming a health care proxy to make medical decisions on your behalf if you aren’t able to make them for yourself.
• Think about a financial power of attorney—the authority to make financial decisions for you if you’re unable to do so.
CHECK ON YOUR EMERGENCY FUND
In an ideal world, you should three to six months’ worth of emergency savings set aside. However, most of us don’t live in an ideal world, which can make it difficult to handle everyday needs, much less unexpected surprises. However, it’s important that you don’t fall into the camp of the 56 percent of Americans who don’t have the cash to cover an unexpected $1,000 bill.
IF YOU HAVE KIDS, MAKE CONTRIBUTIONS TO THEIR COLLEGE FUNDS
Having a tax-advantaged strategy in place for your children’s college education can help you prepare for the rising costs. If you already have one, try to contribute as much as you can. If you aren’t sure how to best go about this, we’re here to help you understand the options and to choose something that will be a good fit for your specific situation.
MAKE CHARITABLE DONATIONS
The benefits are two-fold: You will reduce your taxable income and feel good about giving some of your hard-earned dollars to a good cause. It’s a win-win.
KEEP YOUR EYE ON THE FUTURE
The new year starts as quickly as the last one ends. So be sure to set some new goals and write them down. Do you want to create an estate plan or simply save some money for your teen’s braces? Are you hoping to take that trip abroad? Or you might be expecting some big changes that will affect your finances — such as having a baby or changing your career. Now’s the time to make sure you’re on track to make 2023 your best year yet.
