3 Movements for retirement to be made before 2023

(Kailey Hagen)

Many people are already focusing on 2023 and what it means for their investments, social security benefits and more. But there are still three months to 2022, and that’s plenty of time to improve your retirement preparation and perhaps save some 2022 taxes in the process.

You can start with the three steps described below if you haven’t already done them this year.

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1. Request your 401 (k) correspondence for 2022

If your employer offers a 401 (k) match, you need to contribute enough to your account by the end of the year or you will lose it. 401 (k) s do not allow prior year contributions as IRAs and employers do not give employees an extra bonus if they choose not to claim their match.

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Talk to your HR department or plan administrator if you’re unsure if your company offers a 401 (k) match or if you’ve already requested it for the year. If there is still money on the table, calculate how much you need to set aside by December. 31 to get the full game.

Then, divide this by the number of pay periods left to see how much you need to set aside per check. For example, if you need to put an extra $ 1,000 into your 401 (k) to get the full match and you have six other pay periods left, you should set aside about $ 166.67 per pay period.

If you are unable to claim your full 401 (k) match, do your best to get as much as possible by the end of the year. So, as we move into 2023, make claiming your correspondence your top priority. Put money into your 401 (k) before using other retirement accounts and aim to set aside at least enough to earn your full game.

2. Save extra money for retirement

Savings you don’t plan to use over the next few years can serve you better if you invest them for your future. But you can’t throw this money into a 401 (k). You must open an IRA if you want to make a lump sum deposit. Technically, you have until the April tax deadline to do this, but it’s easier to pay your contribution before the end of the year if you can.

You can choose between a traditional IRA or a Roth IRA. Traditional IRAs give you a tax reduction upfront on your contributions, but you owe the taxes on your withdrawals afterwards. Roth IRAs work the opposite way, offering you tax-free withdrawals in retirement if you pay tax on your contributions now. A Roth IRA is probably the way to go unless you expect your income to drop significantly in retirement. So, a traditional IRA could help you save more on taxes.

A health savings account (HSA) is another option. These accounts are intended to withhold medical savings for those with highly deductible health insurance plans – plans with a deductible of $ 1,400 or more for an individual and $ 2,800 or more for a family. But once you turn 65, the account essentially becomes a traditional IRA with the tax-free medical withdrawal bonus.

If you have an eligible individual plan, you can set aside up to $ 3,650 in an HSA in 2022, while those with eligible family plans can save up to $ 7,300. Adults 55 years of age or older can add an extra $ 1,000 to these limits. Like traditional IRAs, these contributions reduce taxable income this year.

You can open one of these accounts with many banks and brokers, but it is best to choose one that allows you to invest your HSA funds so that your balance grows faster.

3. Review your retirement plan

Now is a great time to look into your retirement plan to make sure you’re still on track for your goals. If you haven’t been able to save as much this year as you wanted, you may need to increase your contributions in 2023. Or, if you’ve decided to retire sooner or later, you may need to create a new retirement plan.

Even if nothing has changed for you, looking around can give you the confidence that you are moving into the future you desire. It can also help you prioritize your savings goals for the next year. Think about how much you would like to save and which accounts you will put your money into first, so when 2023 comes, you can put your plan into action.

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