What Financial Actions Should You Take Before 2017?
Every year, it seems as though the last few months of the year fly by, what with the holidays, a busy shopping season, looming deadlines, and the anticipation of a new year. While the final weeks of the year are busy as it is, don’t forget about your investments and financial strategies, or push them off until 2017. There are several important items to consider by December 31st, including these five:
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1. Maximize Your Retirement Contributions
One of the best ways you can simultaneously save for your future retirement and qualify for tax breaks when you file in 2017 is to take advantage of a company-sponsored retirement account, especially if your employer matches your contributions. The most common 401(k) match is 50 cents per dollar up to 6% of your pay. If you earned $150,000 annually, contribute at least $9,000 each year and get an additional 401(k) match of $4,500, totalling $13,500 per year.
If you can, increase your contribution to your 401(k) by the end of the year to make the most of your retirement savings. For 2016, you can contribute as much as $18,000 (or $24,000 if you are 50 or older).
2. Set Up an Employer Sponsored Retirement Plan
If you’re a business owner, you may be able to save money on taxes for your firm and yourself by setting up an employer sponsored retirement plan. Setting up a 401(k), SEP IRA, or SIMPLE IRA may allow you to save big for retirement while also lowering your current tax bill. For SEP IRAs and 401(k)s, business owners may be able to contribute up to $53,000 pre-tax per year.
3. Give to Charity Strategically
Beyond exchanging presents with your loved ones, now is the time of year when many people choose to give back. By making a charitable contribution before December 31st, you may be able to lower your total tax bill for 2016. It can be especially advantageous to donate appreciated securities to avoid paying taxes on the gains.
If you make a charitable contribution (or have already made one this year), find and organize all receipts you have from making charitable contributions, whether it was a cash donation, securities contribution, or another type of donation, so you have them ready when it comes time to file your taxes.
4. Consider a Roth Conversion
Roth IRAs are attractive because you don’t pay income tax when you withdraw funds in retirement. But based on your income, you may not be eligible to contribute to one and instead must invest in a Traditional IRA.
If you have a Traditional IRA, you may be able to convert to a Roth IRA, which can save you money on taxes in the long run. The deadline to convert to a Roth IRA is December 31st, so now is the time to chat with your advisor is you’re considering doing so or would like to know if it’s an appropriate option for you.
5. Review Your Portfolio’s Gains and Losses
Hopefully, you and your advisor review your portfolio on a semi-annual or annual basis. Regardless of when you review and make updates, the end of the year is key for identifying your realized and unrealized gains and losses. If you do, you may want to offset some of your gains by selling some losses.
Known as tax-loss harvesting, this can help you reduce taxes on your investment gains. Talk with your advisor about potentially harvesting your losses and if it makes sense for you. Should you determine tax-loss harvesting is appropriate, you’ll need to complete it by December 31st.
6. Review Your Goals and Set New Ones
Set aside time at the end of the year to review your financial plan and progress. Did you save as much as you intended? Do you need to catch up before the year’s end? Have any of your goals changed? Do you have new goals for 2017?
If you’re planning to retire, travel, sell your business, or make any other big financial moves, identify now whether or not your budget will need to change and how you’ll accomplish those objectives by this time next year.
Do you have questions on financial actions you should take before 2017? From helping you set your goals to reviewing your portfolio, I’m here to support you along your financial journey. Give me a call at 949-481-1807 or email This email address is being protected from spambots. You need JavaScript enabled to view it. for a year-end review of your finances and steps to take.
Meet Rick
Over a 25-year career in financial services, Rick has helped hundreds of business and personal clients meet their investment goals by developing risk-efficient portfolio management strategies. He holds degrees in Economics and Psychology from the University of California, Irvine.
The water is Rick's second home: He and his family have been fishing Southern California and Baja going on four generations. In the 1940s, his grandmother worked at the Cannery Restaurant in Newport Beach—when it was an actual Albacore cannery. In the 1950s, his father was on the crew that built two of the boats still in service at Dana Wharf Sportfishing.
To schedule a complimentary wealth consultation or to get a second opinion on your financial plan, contact Sportfishing Financial today. To learn more about Rick, visit his website and connect with him on Facebook. To ask a question or get our list of upcoming fishing trips, call 949-481-1807 or email This email address is being protected from spambots. You need JavaScript enabled to view it..