Smart money moves to make NOW
Now is the perfect time to make a few key financial moves that can help you throughout the year and make it easier to reach your goals. Here are six steps you can take now:
1. Cut insurance premiums: Re-shopping your insurance, especially car insurance, is an easy way to free up extra cash. Ask your insurer for a list of discounts and make sure you’re getting all the breaks you deserve. If you have a new job with a shorter commute, or if your teenage driver’s grades have improved, you may qualify for extra discounts.
2. Review beneficiaries: The money in your 401(k)s, IRAs and other retirement plans, as well as the proceeds from life insurance policies, will go to the beneficiaries you designate even if you leave other instructions in your will. Take a few minutes to review your accounts and make sure your beneficiary designations are up to date, especially if you experienced a major life event, such as a marriage, divorce or new child.
3. Protect your identity: In this era of data breaches, it’s more important than ever to protect yourself from ID theft. A credit freeze has become one of the most effective ways to safeguard your credit. Also, go to www.annualcreditreport.com and get a free copy of your credit report from each of the three credit bureaus to see if there is any suspicious activity.
4. Sign up for an online Social Security account: Go to www.ssa.gov/myaccount and open an online Social Security account, even if you don’t plan to retire for many years. The account helps you check for errors in your earnings statement that could reduce future benefits, and gives you an idea of how much you can expect from Social Security.
5. Boost your retirement-savings contributions: If you’ve been maxing out your 401(k) or are turning 50 this year, you’ll want to increase your automatic contributions to take advantage of higher limits and catch-up opportunities. You can invest $18,500 in a 401(k), 403(b), 457 or the Thrift Savings Plan in 2018, a slight increase from last year. Plus, you can add an extra $6,000 if you’re 50 or older (even if your 50th birthday isn’t until later this year).
6. Gather and toss tax records: You should be receiving your year-end brokerage statements and other records soon, along with your 1099 and W-2 forms. After that, you can toss monthly statements, pay stubs and receipts you don’t need for tax filing if they match up with the year-end reports. Meanwhile, start gathering your tax records so you don’t miss valuable deductions before the deadline. If you’re getting a refund, file your return as soon as possible after you receive your documents to thwart ID thieves. The tax-filing season opens Jan. 29, and the deadline is April 17.
Kimberly Lankford is a contributing editor to Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com.