ELM3’s Fall Financial Fitness Challenge
By: Stacey Nickens
The past few weeks have featured a mixed bag of news, and you may be struggling to sit still among all of this chaos. I am thus challenging you to take one week to improve your financial fitness. This 1-week challenge features a task each day that can help you increase your savings, better manage your assets, and even care for your health.
For Day 1, consider increasing your contributions to an HSA or a Roth IRA. You can contribute up to $3,600 to an HSA if you’re single and up to $7,200 if you’re married filing jointly. All household members above the age of 55 can also add an additional $1,000 in catch-up contributions. HSA contributions have the duel benefit of reducing your taxable income for 2020 while also helping you better prepare for your medical needs in the future. You can also reduce this year’s taxable income by upping your other retirement account contributions. If you’re comfortable paying higher taxes now but would like lower taxes down the line, a Roth contribution may be in your best interest.
For Day 2, try scheduling a preventative care doctor’s appointment. Doctor’s are finding that many illnesses, including cancer, are going undiagnosed and untreated because people are scaling back on doctor’s appointments during the pandemic. Make sure you’re caring for your physical health as well as financial health, especially since the two are so intimately tied together.
For Day 3, review your estate plan and beneficiaries. I’ve been recommending clients look into a family trust that includes their house and other shared assets. With a family trust in place, your assets could more easily pass to the surviving spouse and then future beneficiaries. Along these lines, on Day 4, set up a Zoom call with a family member. Besides getting the mental boost of connecting with someone you care about, you can discuss your estate plan and make sure you’re on the same page.
On Day 5, look through your investment accounts to see how much you have invested in income-generating assets. Are your dividends earning enough to support your withdrawal needs? Do you need to make any adjustments now or in the future? Knowing your relatively-stable income levels can also help you feel more comfortable when valuations dip. If you notice you have extra cash, you can use Day 6 to increase your charitable donations for the year. Finally, on Day 7, review your retirement asset withdrawal strategy. You may be able to take advantage of Georgia’s Senior Income Retirement Exclusion. This law allows seniors who are 65 and older to exclude $65,000 in income from state taxes. Seniors between the ages of 62-64 can exclude $35,000 in income from state taxes. If you’re married, you and your spouse can spread out your withdraws between accounts to take advantage of both of your exclusions. Additionally, you may consider adjusting your withdrawals to avoid Medicare premium increases.
You can keep up with the challenge on our Facebook page. Let us know how your Financial Fitness challenge goes, and I hope it provides you with a sense of security during these challenging times.