👩🏾🎓Smart financial moves for 2022 👏
Welcome to the New Year 🎉 – and a new opportunity to make 👩🏾🎓smart financial decisions. Here are a few action items for you to consider today.
Let’s start with contributions to workplace 🏝retirement plans in 2022.
If you are covered by a retirement plan at work, the MAXIMUM deferral, meaning, the most you can contribute to your workplace retirement account from your OWN paycheck, increased from $19,500 in 2021 to $20,500 in 2022. The catch-up provision, or, additional funds you can add starting in the 🎂 YEAR you turn 50, of $6,500. You can read more about this latest update in this article from CNBC.
The other aspect I talk about in this article from CNBC is the ⏱ TIMING of your deferrals, or contributions. Every retirement plan has its own rules 📐 for the particular characteristics of the retirement plan. They can be found in the SPD, or Summary Plan Description. In fact, according to the US Department of Labor, “One of the most important documents participants are entitled to receive automatically when becoming a participant of an ERISA-covered retirement or health benefit plan or a beneficiary receiving benefits under such a plan, is a summary of the plan, called the summary plan description or SPD.” For more info, check out the DOL.gov site. The SPD helps employees understand the timing of employer MATCHES to their own contributions. This is important to know, before you decide to front load any contributions, and possibly miss out on matches that occur ✅ PER PAYCHECK only.
If you are unable to contribute the maximum $20,500 (or $27,000 if you’re at least 50), I encourage clients to auto-escalate 🧗🏿♂️their contributions. Many plans allow for employees to choose this option, at enrollment, or anytime thereafter. It usually allows you to choose the timing of an automatic annual increase the percent you contribute to your plan. For example, if it is common that you receive a 3% raise each year, plan to auto escalate some, if not all of that raise, so that you “pay yourself first” by saving more for retirement instead of having those funds hit your checking account and get spent 🎁 unnecessarily.
Now let’s talk about what changes you should be aware of in terms of your own 🎁 gifting and estate planning🏠.
If you are fortunate enough to have the means to make monetary gifts, you should know that the annual gift tax exemption increased from $15,000 in 2021 to $16,000 for 2022. See the IRS update here. That is great news for 👵🏽👴🏽grandparents who may want opportunities to decrease their taxable estate – suggest $16,000 gifts to your own children who may need those funds for schooling 📓 or other reasons.
And let’s talk a bit about college 👩🏾🎓 expenses and opportunities to reduce them via merit aid.
I am a very big believer in finding the right school at the right price for your children. If you do not qualify for FINANCIAL AID, then please be aware that top schools cost $70,000 - $80,000 a year! That does not mean your child cannot go attend top schools if you have not saved $300,000. There are many opportunities to reduce college expenses, for example, with MERIT AID 👏👏 offered at many schools. If you have children in high school, encourage them to focus on getting the best grades possible, in the most difficult classes they can manage. Also, colleges love to see longevity in activities – so encourage your children to have a few interests where they can develop into leadership positions by the time they are juniors and seniors. This shouldn’t be only sports – but also jobs, community service, or clubs. Basically, colleges like to see children pursue a few activities with energy and longevity.
I’m excited to share with you a few of the new press/articles I’ve been quoted 🗞 in so far this year.
I really enjoy working with reporters and believe that when I can help them with their articles, together we are able to reach a much wider audience and share financial tips and wisdom – hopefully helping more people have a positive impact in their financial lives. I encourage you to peruse the Press page of my site, found here. I frequently speak with reporters, and always update my site with the articles where I’m quoted. To summarize just a few of my articles:
1. “Now’s the time to Boost 401(k) contributions for 2022.”
2. “Pre-tax vs. Roth 401(k): There’s more to consider than you think”
3. “How Advisors are Shielding their clients from Fraud.”
4. “10 Financial Moves to Make in Your 60s.”
5. “Working Moms Are Neglecting 401(k) Rollovers. Why Advisors Should Help.”
6. “Britney Spears’ Fight for Financial Independence.”
7. The Best Car Insurance for Drivers with Bad Credit.”
8. And many more articles found here.
And to wrap up on a personal note, I’m very grateful for my husband and four daughters. The oldest two go to university in Montreal, Canada. They have experienced the same challenges that every other college kid has been experiencing, but they do get to enjoy Montreal and the cultures and opportunities living in a French-speaking province provides. My third daughter is in the process of choosing where she wants to start college in the fall – and it may be out of the country, as well! I’m so grateful that we were able to spend some active, outside time together during the holidays. In this pic of my girls and I after a day of skiing at Bretton Woods, in New Hampshire – you can see Mount Washington in the background.
Family in front of Mount Washington, New Hampshire, after a fun day of Nordic skiing
I hope you’ve also been able to create some loving family 👩👩👧👧 memories despite the on-going health challenges the country continues to face.
Wishing you 🕊peace and ❤️ love,
Catherine
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.