Sep 21, 2015
We’re only a few months away from another new year. Of course, starting the next one while being in the green is not advisable but basic common sense.
Here are 3 financial suggestions to consider from bonafide financial planners:
1: Increase Your Savings Rate
You can still increase your savings rate that can be added into your employment-sponsored retirement account by the end of the year. Those under the age of 50 can contribute up to $18000 – an increase by $500 from last year. As for those above the age of 50, an additional $6000 is allowed. For this, make sure you check your accounts to see how close you are to the maximum and then increase your contributions accordingly. No matter what, put away as much as you can.
2: Convert Your IRA
If your income has dropped during the year – probably due to a gap in employment – convert your money in a traditional IRA to a Roth IRA. Doing this will mean that you end up paying taxes only on that income when you’re in a lower tax bracket. One advantage is that Roth conversions have a deadline of Dec. 31 instead of Apr. 15 for regular Roth IRA contributions. It is the best opportunity to pay taxes according the tax bracket that you’re in.
3: Rebalance investments
Given the recent market volatility, rebalancing your investments is the ideal thing to do. For this, consider assets that are above your target percentage. Now, sell what you have too much of and buy what you have too little of. This is usually done every quarter by professional money managers but doing it once or twice a year should be enough. Of course, if you’re selling positions at a loss from a taxable account, remember to get a tax write-off for 2015.