With the end of the year quickly approaching, it is time for retirees and investors to prepare. We look forward to helping you advance your economic future! Christine Benz, director of personal finance and retirement planning for Morningstar, emphasizes the importance of intentional financial strategy. She considers this approach to be indispensable during this critical time period. Benz is joined by Margaret Giles, a senior editor of content development at Morningstar. Jointly, they describe important steps that everyone—from consumers to policymakers—should take to end this year on a high note financially.
This last point is one of the key areas Benz emphasizes when it comes to people 73 and up—how to link RMDs with the practice of portfolio rebalancing. This method not only prevents tax misuse but provides a more diversified investment mix. As with all charitable giving, for those 70-½ and older, using the QCD is a smart move. This method allows them to donate a portion of their Individual Retirement Account (IRA) directly to charity, potentially reducing the taxable amount of their RMDs.
Benz assists retirees in meeting their financial needs as the year comes to a close. They provide a great checklist of critical steps to pursue. This checklist is a useful resource for retirees who want to make the most of their financial situations before the year’s close.
So, to our investors of 50 and above, heed this advice about why you need to consistently rebalance your portfolio. As they near retirement status, it’s even more critical to have a prudent asset allocation. People within this age range might want to take advantage of catch-up contributions allowed in many retirement accounts. Of particular interest, though, are the special provisions available to 60 to 63-year-olds. These permit extra catch-up contributions, which enable them to pad their retirement savings immensely.
Benz wants to remind investors that they can still fund IRAs and HSAs through the tax filing deadline. This offers real flexibility for those who may not have been able to max out their contributions over the course of the year. This opportunity is especially beneficial for those who want to save more for retirement while reducing their taxable income.
Another key part of financial planning can be re-evaluating your contributions to get the most out of your company’s retirement plans. This review process is a huge determining factor of an individual’s financial health, especially with the year coming to an end.
Benz recommends that when investors have to rebalance their portfolios, they think about U.S. versus non-U.S. exposure. This evaluation can help ensure that investment strategies align with broader market trends and individual risk tolerance.
Moreover, donor-advised funds are another avenue for philanthropic giving. These accounts allow users to extend their charitable giving over several years. This new tactic provides tremendous tax advantages, along with the feel-good factor of giving to wonderful charities.
