Keep Your Finances in Check
Taking the time to review important accounts can help keep your overall strategy on track.
INVESTING & RETIREMENT
Save at least 15% of your income in your employer-sponsored retirement plan and individual retirement accounts (IRAs). Be sure you're on track to maximize your Traditional IRA or Roth IRA contributions by April 15, 2013. Because qualified withdrawals are tax-free, Roth IRAs may be a good option for many individuals.
Add 2% to your savings next year—and every year afterward—until you're investing at least 15% of your income. Over time, the extra savings could significantly increase the size of your nest egg.
Take required minimum distributions (RMDs). If you're age 70½ or older, you must take an RMD from Traditional IRAs by the end of the year.* Check with your plan sponsor for RMD requirements from employer-sponsored plans.
With Catch-Up Contribution:** $22,500
With Catch-Up Contribution:** $6,000
Enroll—or spend the money you have—in
flexible spending accounts (FSAs). FSAs allow you to set aside pretax dollars from your paycheck for medical expenses and, under some plans, for dependent care. If your employer offers an FSA and you're not taking advantage of it, sign up during open enrollment.
Some individuals avoid FSAs because the plans require spending the money by the end of the year or early in the following year, and they don't want to lose the assets. But the benefit of setting aside pretax money from a paycheck can make these accounts worthwhile.
Consider charitable giving, which, in addition to being personally rewarding, can help lower your tax obligation. Review your donations or plan how much you want to give before the end of the year. Tax deductions for your donations are possible only if you itemize them on your tax return.
If making one large gift at the end of the year is too much, consider setting up automated, regular payments to your favorite charities throughout the year.
Choose or update beneficiary designations if you get married or divorced or if you change jobs.
The range of options for who—or what—you designate to inherit your assets is broad and can include charitable organizations. Your beneficiary designations will supersede what's documented in your will.
Review your will and other estate planning documents for the same reason you should review your beneficiary designations—because your personal circumstances may have changed. If you move to a different state, consult with an estate planning attorney to be sure your will is in line with the state laws.
Talk to your spouse or a loved one about your financial and estate planning documents so he or she can access information in the event you become incapacitated. Make sure important names and phone numbers are easily accessible.
**Catch-up contributions are available only to investors age 50 or older and are not available in all employer-sponsored plans.