As the year comes to an end there are some things you may want to consider before 2021 arrives in just a few weeks.
- Increase your retirement savings. The maximum amounts allowed to 401k and IRA retirement plans remains unchanged for 2021 at $19,500 ($26,000 if over 50) and $6,000 ($7,000 if over 50) respectively. Consider saving as a percentage versus a dollar amount. Some 401k plans allow you to increase your percentage savings automatically every year.
- Replenish your emergency fund if necessary. Three to six months of living expenses is a good idea. If you found yourself using more during the pandemic, consider an emergency fund of six to nine months.
- Consider lowering your debt. Reducing and eliminating debt could mean making extra payments on your mortgage or vehicles. It may also necessitate refinancing your mortgage. With current rates as low as they are, it may be wise to refinance from a 30-year mortgage to a 15-year or even 10-year mortgage.
- Review your estate. Make sure your beneficiary designations are up to date on all of your retirement plans, life insurance, and other accounts. Review your will to make sure it’s up to date and still reflects your wishes. You may also want to discuss and consider powers of attorney and advanced medical directives.
- Review your insurance. Review your auto insurance policies to make sure you carry enough coverage, and if deductibles should be changed. The same is true for your home insurance. Don’t have an umbrella policy? Get at least $1 million in coverage. It’s dirt cheap. Review your life, disability, health insurance to see if any changes or additions are necessary.
- Commit to learning or improving on one area that interests you. Read up on the subject, take a class, practice what you’re learning. While financial improvement and stability is important, don’t let your self-improvement atrophy.
Sterling Raskie, MSFS, CFP®, ChFC®
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Thank you for sharing these helpful tips! Retirement savings are extremely important. If your age is 50 years or above, you can take the advantage of catch-up contributions to IRAs and 401(k)s and boost your savings.