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Year-End Moves To Make Now

October 04, 2022
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Blog: Year End Moves To Make Now

 

The weather here in New Jersey has definitely turned to autumn and, despite the fact that we were having summer barbecues only a few weeks ago, the holidays and year-end will soon be upon us. 

To that end, it’s time to prepare for some financial moves that should be completed before the holidays.


Retirement Plans

As I’ve written about on several occasions this year, 2022 is experiencing a bear market.  Bear markets are never pleasant, but that doesn't mean you can’t take advantage of them.  Be sure that you’re putting as much as possible into your retirement savings, especially at these reduced prices. 

For those under age 50, you can add up to $20,500 to your company 401(k) account in 2022, or $27,000 if you’re over age 50.  This is especially important if your company matches any or all of your contributions.  By not contributing to at least the amount of the company match, you’re potentially leaving company money on the table that could be going into your account.

If you don’t have a company 401(k), those under age 50 can contribute $6,000 to an IRA or, if you’re over age 50, you can contribute $7,000.  At least those of us over a certain age have an advantage in something.


Talk To Your Accountant Now

Most people wait until tax time to speak with their tax professional, but that can be a mistake if you have a more complex tax situation.  Speak with your tax professional now to uncover some potential financial moves you could make before the end of the year, such as taking tax losses on stocks or making charitable contributions, in order to improve your tax situation when you file.[1]

This is particularly important if you’ve experienced a life event in 2022, such as a divorce or the gift of an inheritance that could impact your tax situation.  Early planning could prevent headaches down the road.


Use It or Lose It On Your FSA

Do you have a Flexible Spending Account?  If so, you’ll want to make sure you use those funds prior to December 31st, or you may end up forfeiting them.  Make sure to schedule anything now that could use FSA dollars so you utilize them prior to year-end.


Check Your Emergency Fund and Spending

Many “experts” in the media are predicting a recession for 2023.  Whether or not that happens remains to be seen, but you should have an emergency fund regardless. 

A best practice for an emergency fund is to have 3 months of expenses available if your household has two incomes coming in, or 6 months of expenses available if your household has only one income coming in.  Those funds are strictly for emergencies, so they should not be exposed to any financial instrument that fluctuates (e.g., stocks, bonds). 

Along those lines, another thing to consider is your spending.  The holidays tend to get us to spend more than we usually would, so try to keep those temptations in check.  The first step to keep spending lower is to create a reasonable budget that is honest about what you can afford, and then stick to it.  If the “experts” are right about a recession, it would be best to spend less for now rather than deplete your savings or, worse, add debt.

As always, if you have any questions or would like to discuss this further, please don’t hesitate to contact me.

Regards,

Joe

 


[1] Neither Joseph A. Dispenza nor Dispenza Financial, LLC, are tax advisors.  See your tax advisor for specific tax advice

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.  

Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Investing includes risks, including fluctuating prices and loss of principal.

 


[1] Neither Joseph A. Dispenza nor Dispenza Financial, LLC, are tax advisors.  See your tax advisor for specific tax advice