As we move toward the end of the year, it’s a good time for you who are employed (either with an employer or self-employed) to check-in on your savings plan. Here are some reasons why.
Life changes may have impacted your savings plan in positive or negative ways. Promotions, raises, downsizing, unexpected expenses, or a growing family impact your financial situation. A review of your current financial situation allows you to adjust your savings contributions to keep pace with your evolving income and goals.
Market fluctuations are inevitable, and your investment portfolio may be out of alignment with your financial plan. A check-in gives you an opportunity to assess your portfolio’s performance and rebalance if needed.
You have an opportunity to maximize your retirement savings contributions before year-end. If you have access to an employer’s retirement plan like a 401(k), are you on track to maximize your contribution for 2024? If you are self-employed, how have you been saving for your retirement plan? In addition to your quarterly tax payments, have you been setting aside a percentage of your income so you may maximize your contribution to your retirement plan?
Each of the mentioned reasons may have tax-planning implications. Life-changes may trigger actions that may have an impact on your tax situation. Market fluctuations may provide opportunities to realize portfolio losses in taxable accounts and potentially reduce tax liability whereas gains may increase tax liability. Finally, contributing to your retirement savings may also reduce your tax liability while withdrawing from your retirement savings may do the opposite. Now is the time to discuss tax-planning opportunities.
Next month, we’ll cover reasons why it is important for retirees to check-in on their spending plans before year end.
Wendolyn Forbes is a CERTIFIED FINANCIAL PLANNER™ with Wealth Transition Finance, A Member of Advisory Services Network, LLC. Wendolyn is a fee-only financial planner and member of the National Association of Personal Financial Advisors (NAPFA).
CFP Board owns the marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the U.S.
This material is provided as a courtesy and for educational purposes only. Advisory Services Network, LLC does not provide tax or legal advice. The information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. Consult your own legal or tax professional for information concerning your individual situation.
Originally published in the September 2024 issue of Positively Haywood.