According to Statista the most popular New Years resolutions are to exercise more and eat healthier. They’re on my list too, but I’ll encourage you add these top money resolutions to your list:
Number One: Maximize your Health Savings account contributions. HSA’s are one of the most misunderstood and underutilized savings vehicles in my opinion.
Visual – Health Savings Accounts(HSA)
Misconceptions
1) Use it or lose it – Completely False! You can save it indefinitely into your retirement years
2) “I’m not eligible” – Are you sure? While you must be enrolled in an eligible plan, many people incorrectly assume they are not eligible.
“So what’s the big deal?” – Not only do you get to deduct your contributions, they grow tax-free and are tax-free upon qualifying distributions. What other savings vehicle is triple tax free? None.
Number Two: Make sure your legacy planning is up to date
Visual - Make sure your beneficiary designations are up to date for retirement accounts, life insurance policies and annuities.
Will – You decide where your assets go or the Probate court does!
Durable Power of Attorney
Health Care Power of Attorney
Living Will(if desired)
Trust – when appropriate
Number Three: Interest Rates have increased over the past year, time to review your debt-
Visual - Credit Cards – Do you pay off your credit cards every month? If not, how many credit cards do you owe on? What is the interest rate? Do you have a plan to reduce your debt in 2024? If you haven’t reviewed these items in a while it’s time to do it now.
Number Four: Check your Credit Reports
A credit report is different than your credit score. Your credit report can help you catch signs of identity theft early
Visual - Each year you are entitled to receive a free credit report from the top three credit reporting bureaus. You can request it at www.AnnualCreditReport.com
Number Five: Review your retirement plan savings
Visual - If your employer plan makes matching contributions, make sure you are at least contributing to the matching amount, otherwise you are leaving money behind. If you are already making the minimum matching contribution, increase your contribution amount by 1%. It’s just 1%, you won’t even notice the difference!
Contribution limits have increased for 2024 – 401k and 403b limits have increased from $22,500 to $23,000 and IRA contribution limits have increased from $6500 to $7000
When was the last time you reviewed your plan investments? Consider consolidating old plans to make your life easier!
Number Six: Roth IRA’s are IRA’s that grow tax-free.
Visual - If you are in a lower tax bracket in 2024 consider a Roth Conversion. A Roth conversion is coverting your traditional IRA to a Roth IRA.
If your income is above the IRS contribution limits you may be eligible to make a “back door” Roth IRA contribution. This is a process to make a Roth IRA contribution when you are otherwise ineligible. Sounds suspicious, but it’s totally legal.
Number Seven: Qualified Charitable Donations
Visual - Qualified charitable distributions (QCDs) are a unique tax strategy that allow individuals who are at least age 70½ and have Traditional and/or Inherited IRAs to distribute up to $100,000 per year directly from their IRA to a 501(c)(3) nonprofit with no federal income tax consequences.
Number Eight: Review your Social Security Benefits statement
If you are not yet collecting Social Security benefits, when is the last time you reviewed your statement? Probably a while! Social Security no longer mails annual statements to everyone.
Visual - Go online to www.ssa.gov and request your benefits statement
Number Nine: Consider a 529 education savings plan account
With the rising cost of college tuition, many parents and grandparents are concerned about their ability to pay for their children's or grandchildren's education. Let's face it - college is very expensive!!
A 529 college savings plan is a great savings vehicle for this purpose, and it has multiple benefits.
The most popular features include income tax benefits, estate tax benefits, and flexibility with regards to both contributions and the use of the plan funds.
Probably the most appealing benefit of the 529 plan is the potential tax savings.
Number Ten: What is your financial goal in 2024?
Financial goals are no different than popular health goals
Visual - Debt reduction? Increased savings? A Wealth plan? Increase your tax efficiency? Charitable Giving? Estate plan?
We have the resources to help you with any of the goals
Visual - Always consult with your legal and tax professionals before implementing any changes. Wells Fargo Advisors Financial Network is not a legal or tax advisor.
Investment products and services are offered through Wells Fargo Advisors Financial Network, LLC (WFAFN), Member SIPC. Pharos Financial Advisors is a separate entity from WFAFN.