This is a statement I make to my retiring clients. Most people have a 401(k) or 403(b) that they save while working. You may like the funds you have in those accounts, but when you retire, you should roll them over to an IRA. Here are the reasons why:

If you need to take a withdrawal the minimum tax withholding from a company account is 20%. Most people are not in a 20% tax bracket when they are retired. You will be giving money to the Government interest free until next year when you get a refund.

Your former plan may make changes that you will find out after the fact. Those changes, especially to the funds available, may not be to your liking.

The internal expenses are generally higher than investing outside of a company retirement plan.

Take your money with you when you retire.

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I have quite a few clients retiring this year, so thinking about their estate is coming front and center.
There are a few basic items everyone should have in place to make sure things move smoothly if something adverse happens.

1. Make sure all of your accounts have current primary and contingent beneficiaries listed. Even your bank accounts can have beneficiaries added to them.
2. Make sure you have a Living Will: I call this the “feed me- don’t feed me” will. A Living Will states to what extent you want medical treatment if you are incapacitated.
3. Durable Power of Attorney: Most of us are familiar with a regular Power of Attorney, the Durable Power of Attorney allows someone to act on your behalf if you cannot speak for yourself.
4. Florida Medical Surrogate: In Florida, a healthcare surrogate is a legally designated representative who can make medical decisions on behalf of an individual who is unable to do so themselves due to incapacity.

These basic items will make your life and those of your loved one easier during trying times.

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As a number of my clients approach retirement, they are asking which debt they should put extra funds towards, their mortgage or their car? I have been a fan of semi-monthly mortgage payments for a long time, it is an easy way to knock about 10 years off the life of your mortgage. Also, I believe that putting funds toward something that will appreciate in value vs. depreciate is the way to go. So accelerate payments toward the mortgage first.

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First let me explain what an emergency fund is for and how much you should have there. We have all been in the place where a major appliance breaks, or you get into a car accident, or one of your kids has an emergency, this is why you need an emergency fund. These are the dollars that sit in a checking, savings, or money market account and are liquid at a moment’s notice. How much you should have in this fund is a matter of personal preference. I think at least $5000 is good, some people feel comfortable with $10,000, some do not feel comfortable unless there is at least $100,000 in the emergency account.

Your 401(K) is for your retirement, which hopefully will last a very long time. You do not want to be dipping into your 401(k) for short term emergencies. Work to build your emergency fund, you will then have some peace of mind.

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Originally, I paid my bill by mail and only made monthly payments. Mail was the only choice, so I really paid attention to the charges and fees that were assessed due to carrying a balance. Paying your bill monthly helps build up your credit score by showing that you can make payments. Here I am many years later and I pay my bill online. I make sure to review all of the charges to confirm they are mine, and I pay my bill in full. I imagine that most people also pay their bills online. If you carry a balance what you may be missing is what you are paying in interest charges. Please make sure you review everything carefully to make sure the charges are legit and that you do not pay excess interest.

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Occasionally the Federal Government makes changes that are beneficial. This year if you are between the ages of 60-63, there is a substantial change for you to take advantage of. It is the Super Catch-up Provision in the Secure Act 2.0. Here is what it provides:

For 2025, the standard catch-up contribution limit for 401(k) plans is $7,500. That means anyone who meets the age requirements can contribute a total of $31,000 to their workplace retirement plan.

The SECURE 2.0 Act increased the catch-up contribution for some employees to $10,000 or 150% of the standard catch-up contribution, whichever is greater. Since 150% of $7,500 is $11,250, that is the new catch-up contribution limit in 2025 for select investors.

Here is the catch. You are only eligible to make this super catch-up contribution in 2025 if you are between the ages of 60 and 63 (inclusive) at the end of the year. If you are turning 64 in 2025, sorry, you just missed the boat. But if you are about to celebrate your 60th birthday, you will have four years to make supersized contributions to your 401(k). *

If you are eligible for this increased savings, please take advantage of this opportunity to put money in your pocket vs. paying Federal Income Tax.

*USAToday.

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I know, nobody really like resolutions, but these can really help you have a successful financial life. I don’t think any of them are too hard to accomplish.

Increase your 401k deposit amount and reallocate funds if necessary. The more you put into your account, the less you will pay in current income taxes.

Check your credit report. this is something that can be done annually for free through the annualcreditreport.com site.

Review your taxes. See if there are areas you are not using that can save you some income tax.

Devote some time to these points, then you will have a Happy New year!

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The best part of this time of year is the memories we make. Happy holidays!

We get so excited about the upcoming holidays that we often overlook some important end of year financial issues. Here are a few items I think are important for you to review:

Have you maxed out your retirement savings?
Review your contributions to your company or individual retirement plan to make sure you have contributed as much as you can. Pre-tax contributions will save you on current income tax while Roth contributions will save you future taxation.
Review your itemized deductions.
One thing to look at is bunching your deductions. If you plan to donate the same amount of money each year, consider “bunching” the donations into a single year. This could increase your potential itemized deduction for that year. Consider using a donor-advised fund to spread out the giving while taking advantage of “bunching.”
Another are to look at is your property tax, it may be advantageous to pay this years and next year’s property tax at one time to increased your itemized deductions.
Check your Credit status.
Go to any one of the credit sites to make sure there are no surprises. Make sure the items listed are actually yours, check your credit scores, and look at the interest rates you may be paying to see if they =can be lowered.

A little bit of work can usher you into a financial healthy New Year.

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Acronyms often make it easy for us to remember how to do things, here is an acronym for your financial goal setting:

S: Be specific with what you want to achieve. Here is an example: “I want to save $5000 for a trip to Italy”.

M: make your goals measurable. An example of this would be stating specifically how much money you want to be saving every month.

A: Make your goal achievable. Based on your own financial situation, make sure you set a goal you can achieve.

R: Your goals should be relevant. For example, if your car needs to be replaced soon, do the homework necessary to be able to save for that specific goal.

T: Timely. Set a deadline for your goals. Each goal will have a specific deadline, this will help you stay on track for success.

*ChatCPT is source of SMART

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