New Year’s Tweaks
LET���S NOT CALL THEM resolutions because that imposes a sense of obligation. Rather, think of these as adjustments that could give you���and maybe your kids���a smoother ride in 2022:
Check the beneficiaries on your employer���s retirement plan, IRAs and life insurance policies. Sometimes money winds up with an ex-spouse or maybe a younger child gets left off the list. This is an easy fix���while you���re alive. After that, it���s a mess.
How much do you pay for your investments���in dollars, not percentages? If it isn't clear from your annual statement, why not give the investment company a call? If the answer seems large, ask how it might be reduced. As Vanguard Group founder Jack Bogle liked to say, ���In investing, you get what you don���t pay for������because lower costs leave more money for the investor.
If you have a young adult home for the holidays, one who has a job with a 401(k), ask if he or she knows the match. If that draws a blank, explain that matching contributions are ���free money.��� A third of retirement plan savers miss the��full match���even when they���re automatically enrolled in the plan.
The 401(k) contribution limit is increasing by $1,000 to $20,500 in 2022. If you get a year-end raise or bonus, this could be a great time to boost your contribution rate without feeling any loss in income. The contribution limit is $27,000 if you���re age 50 or older and your plan allows catch-up contributions.
Many experts advise rebalancing back to your target asset allocation once a year or so. This controls your portfolio���s risk level, while pushing you to sell a sliver of your winners and add money to lagging investments. This year, it would likely mean selling stocks to buy bonds. If that sounds terrible, think of it this way: Sell high and buy low. There are no taxes for rebalancing within a 401(k), IRA or other tax-deferred accounts. But in a taxable account, make sure you understand the tax cost before making any investment sales.
Look up the performance of your actively managed mutual funds. If they���ve consistently earned less than their benchmark, maybe it���s time to join the exodus to indexing. Again, there are no taxes owed if you switch funds within a 401(k) or IRA, but you���ll want to know the tax costs before making any changes in your taxable account.
Check the beneficiaries on your employer���s retirement plan, IRAs and life insurance policies. Sometimes money winds up with an ex-spouse or maybe a younger child gets left off the list. This is an easy fix���while you���re alive. After that, it���s a mess.
How much do you pay for your investments���in dollars, not percentages? If it isn't clear from your annual statement, why not give the investment company a call? If the answer seems large, ask how it might be reduced. As Vanguard Group founder Jack Bogle liked to say, ���In investing, you get what you don���t pay for������because lower costs leave more money for the investor.
If you have a young adult home for the holidays, one who has a job with a 401(k), ask if he or she knows the match. If that draws a blank, explain that matching contributions are ���free money.��� A third of retirement plan savers miss the��full match���even when they���re automatically enrolled in the plan.
The 401(k) contribution limit is increasing by $1,000 to $20,500 in 2022. If you get a year-end raise or bonus, this could be a great time to boost your contribution rate without feeling any loss in income. The contribution limit is $27,000 if you���re age 50 or older and your plan allows catch-up contributions.
Many experts advise rebalancing back to your target asset allocation once a year or so. This controls your portfolio���s risk level, while pushing you to sell a sliver of your winners and add money to lagging investments. This year, it would likely mean selling stocks to buy bonds. If that sounds terrible, think of it this way: Sell high and buy low. There are no taxes for rebalancing within a 401(k), IRA or other tax-deferred accounts. But in a taxable account, make sure you understand the tax cost before making any investment sales.
Look up the performance of your actively managed mutual funds. If they���ve consistently earned less than their benchmark, maybe it���s time to join the exodus to indexing. Again, there are no taxes owed if you switch funds within a 401(k) or IRA, but you���ll want to know the tax costs before making any changes in your taxable account.
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