As 2015 winds down it may be an ideal time to consider wrapping up (pun intended) some loose ends regarding your finances and getting ready to welcome 2016 financially prepared. Here’s a list of things to consider as 2015 comes to an end.
- Have you made your maximum IRA contribution for 2015?
If you have yet to contribute the maximum to your IRA there’s still time. Individuals under age 50 can contribute $5,500 while those 50 and over can contribute $6,500. Individuals have until they file their 2015 taxes or the 2015 tax deadline (whichever comes first) to make their 2015 IRA contributions. Expecting a Christmas bonus? Your IRA is a good place to put it.
- Consider increasing the amount you contribute to your 401(k).
If you’re not already maxing out your employer plan contributions ($18,000 if you’re under 50 and $24,000 if you’re 50 or older) consider increasing the amount you contribute. Many individuals get annual raises yet fail to give themselves a raise for retirement. An easy way to do this is simply save a set percentage (such as 10, 15, or 20 percent) and your contributions will automatically increase with raises.
- Are you taking advantage of all your employer’s benefits?
Take some time to look at all the benefits your employer offers. This may be health and fitness plans, flexible spending accounts, and other benefits. Very often employers will provide these benefits at significant discounts as well as tax savings to employees.
- Pay it forward.
For years you’ve read about us ranting about paying yourself first. But also consider looking back at your year and what you’ve accomplished and been blessed with. Then consider paying it forward. Give to others in need, volunteer to an organization that needs it, bring happiness to someone’s life.
- Set financial goals.
Take some time to sit down and write sown some financial goals you’d like to accomplish in 2016. This could be becoming debt free, or simply paying down one debt at a time. Other goals may be to establish an emergency fund, save more for retirement or start a college savings plan. Goals aren’t goals until they’re written down and acted on.
- Review your risk management.
This is a great time of year to review your auto, home, life, health, and disability insurance. Check to make sure your liability limits are high enough on your auto and home insurance. Look into your deductibles. If you have an older vehicle not worth much, consider raising or eliminating your deductibles to save premium. Take some time to do a video inventory of your home. In case of a total loss, you’ll have access to a video file of all of your belongings, making it easier to inventory those items if lost due to fire.
Review your life and disability insurance. In the event of your death, will your family have enough to keep living comfortably? Consider disability insurance if you don’t have it. Statistically, you’re more likely to become disabled during your working lifetime than you are to die prematurely. Hedge this risk with disability insurance to protect your income.
- Talk with a financial professional.
Some of the items mentioned above may be confusing or even daunting to undertake. That’s where you can leverage the knowledge of a competent financial professional. An independent, fee-only fiduciary advisor can provide guidance on many if not all of the above issues while remaining legally bound to act in your best interest. A few hours and a few hundred dollars can set you up to meet 2016 with the confidence to achieve your financial goals.