What should I be doing for my year-end 💵 planning?
1️⃣ INCREASE my maximum retirement plan deferrals for 2023 ↗️.
The IRS announced that the maximum contribution to 401k plans increases in 2023 to $22,500 from $20,500, and if you’re 50 or older, you can also add an additional $7,500 in catch up contributions, which has increased from $6,500. So plan your deferrals accordingly – typically, it can take a few weeks to implement a different requested withdrawal amount – so I would recommend setting up a calendar reminder during the last 2 weeks in December, to change your deferral for next year.
Also, the annual limit on contributions to IRAs increases in 2023 to $6,500, which is up from $6,000. The catch-up contribution if you’re 50 or older will not change – and remains at $1,000.
If you’re unsure of how to think about your retirement plan contributions for next year, please schedule time with me today so we can chat about your unique situation and your options.
2️⃣ Review my long-term care (LTC) funding plan.
November is long-term care insurance awareness month. Did you know that the top concern for baby boomers is how to pay for long term care needs? (source: 2021 Insurance Barometer Study, Life Happens and LIMRA)
Did you know that Medicare does not pay for long-term care needs? This is defined when you need help with at least 2 of 6 ADLs (activities of daily living, which include bathing🛀🏾, dressing 🥻, toileting 🧻, transferring 🚶🏿♀️, eating 🥗, and continence 🧷). If you and your family do not have a plan for care, your estate assets are at risk of being depleted.
I bought my husband and I our own LTC insurance policies in my early 40’s. I structured the premiums as a 10-pay, meaning, after 10 years, I was done paying for the policy. I did this in my early 40’s, because I knew that once I entered college paying years, I would have less disposable income and be less inclined to add another bill while paying for tuition.
I’m a big believer in thinking about your long-term care insurance plan earlier than many other advisors. Clients tend to be in peak earning years in their 40’s and 50’s. Many have already experienced an aging family member who needs services whose costs add up quickly. I’ve also seen way too many injuries, joint replacements, etc at younger ages, as many of my clients are very active and tend to rack up the sports injuries. These types of surgeries may preclude you from qualifying for many long-term care policies.
However, if you’re older, it is always worth having the conversation about coverage. There are many types of policies out there, and if you don’t qualify for one type, there may be other options available for you.
3️⃣ If I am philanthropically inclined, here are some alternative ways to think about 2022 charitable contributions.
If you are having a great 2022 in terms of crushing it with income or other asset gains, you may want to consider a Donor Advised Fund. A Donor Advised Fund, or DAF, allows you to take an immediate tax deduction, but then also provides you time to decide which recognized charities will receive your contributions. I love this strategy within families, where you can involve your children in the gift-making process.
One idea is to discuss philanthropy during Thanksgiving🌽🦃 celebrations. If you have children, decide how much you’d like to gift from your DAF, and have them research and come to consensus as to how much each philanthropy will receive from your fund. You may be surprised what they come up with, and you’ll be introducing a concept the world needs to see more of – children being raised thinking of causes that can use their support.
If you’re already required to withdraw your Required Minimum Distribution (RMD) (and heads up for those who will be doing this eventually), a Qualified Charitable Distribution (QCD) is something you may want to consider. This allows you to direct up to $100k in retirement plan distributions to a qualified charity and avoid the associated taxes that comes if you just took the distribution directly to you, and then paid the charity. But beware – this is a complex strategy, not to be undertaken without the advice of your tax professional.
4️⃣ Check out Green Bee’s press coverage.
I love to educate 🧑🏼🎓 clients about financial topics, and I’m able to translate financial jargon into real-person language, while avoiding mansplaining that often blusters forward from men in my industry.
As a result, I’m often contacted by the press 📰 to participate in their articles. Most of them I link to on my website here, and almost all of them I post on my social media accounts.
I encourage you to connect with me on social media:
5️⃣ Schedule a year-end review.
Have you scheduled your year-end review? If you are an existing client, please 📲 schedule a “Client Review”. If you’re not yet a client but would like to chat, schedule a “Complimentary Consult” here.
🎬 In conclusion . . .
In summary, I wish you all a happy, healthy, prosperous holiday season and New Year🎇. Enjoy time with family and friends, and remember to be grateful for every day you have with loved ones. Life is short, and we should be sure to plan for unexpected twists and turns to our personal life road map. I would be honored to help you with your personal financial roadmap and finetune your financial GPS and plan. Please reach out today to schedule time with me.
The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual.