Check these off your list before the ball drops on Dec. 31.
You may be busy tackling year end goals in the coming days. But before the ball drops on Dec. 31, you should revisit your retirement goals and make sure you’re on track. If the numbers aren’t working in your favor, you can start planning ahead and creating a retirement checklist so you won’t be under pressure to figure it all out later.
While you’re wrapping up holiday shopping and preparing for New Year’s Eve plans, here are a few items you can squeeze into your schedule.
1. Check your retirement balances
Give your finances a checkup to see if you’re on track. The end of the year is a good time to check on all your retirement accounts, such as old 401(k)s and any individual retirement accounts (IRAs), you may have opened. Then, ask yourself the following questions:
What are your retirement goals?
How much money do you need to save in 2024 to get closer to your goals?
Are your retirement accounts enough to support you during retirement or do you need additional sources of income?
These are just a few questions to get you thinking about your retirement status. Once you have a better idea of where you stand and where you want to go, you can make moves that get you closer to the finish line.
2. Determine your contribution goals
It’s most likely too late to make contributions to your employer-sponsored retirement plans for 2023. But there’s still time to beef up your balances in a Roth or traditional IRA. You can contribute up to $6,500 for 2023 if you are under 50, and you have until April 15 to do so.
Let’s say you received a holiday bonus and you want to put your money to work. You can set some of the funds aside in an IRA so that you can build your nest egg.
While you’re checking the box on last minute goals for 2023, don’t forget to plan ahead for 2024. You’ll have a better chance to beef up your retirement savings next year due to the new contribution limits. For example, the 401(K) contribution limits are going up to $30,500 and the IRA limits are increasing to $8,000 if you are 50 and older.
3. Set up your automatic contributions for 2024
You’ve probably already started jotting down things you want to do in 2024. If one of your goals is to save more money, you can automate the process so you don’t have to add another item to your to-do list.
Let’s say you are 40 years old and your goal is to max out your Roth IRA in 2024. If you want to make it happen in one year, you can set up automatic monthly contributions from your checking account to your Roth IRA. If you save about $584 every month starting in January, you’ll be able to max out your Roth IRA by the end of 2024 without adding more work to your plate.
4. Calculate your potential income
It’s a good idea to estimate your potential earnings for 2024 so you can determine how much you can tuck away in your retirement accounts. Also, if you have your eyes on a Roth IRA in 2024, you want to make sure you meet the requirements to make direct contributions to the account.
Below are the income limits for maximum and reduced Roth IRA contributions. Once your modified adjusted gross income (MAGI) goes over $161,000 in 2024, you won’t be able to make direct contributions to the account.
2024 TAX FILING STATUS
INCOME LIMIT FOR A FULL ROTH IRA CONTRIBUTION
ROTH CONTRIBUTION PHASES OUT ENTIRELY FOR INCOME ABOVE:
Single and head of household
$146,000
$161,000
Married filing jointly
$230,000
$240,000
DATA SOURCE: IRS.
You may have your hands full in the coming days with things like holiday cleaning and New Year’s Eve plans. But taking some time to think about your retirement goals and game plan can pay off in the long run.
