Time flies, and it’s hard to believe we’re wrapping up another calendar year. While we’re in the midst of the busy holiday season, here are a few things you can do to prepare for the end of the year and set yourself up for a fresh start in 2020:
1. Review your credit reports. The end of the year is a good time to check your credit reports if you haven’t reviewed them lately. You can access a free report from each major credit bureau- Experian, Equifax, and TransUnion- every 12 months at www.annualcreditreport.com. If you find errors, such as accounts you don’t recognize, this could indicate you’ve been a victim of identity fraud. Check the credit bureau’s website for its process to dispute an error.
2. Freeze and monitor your credit. The holidays are an excellent time to take extra precautions to protect yourself from identity fraud. Adding a credit freeze, which is free, to each of your credit reports allows you to restrict lenders from viewing them in response to identity thieves trying to open new accounts in your name. You can temporarily lift the freeze at any time at no cost. Go to Experian, Equifax, and TransUnion websites to learn more about freezing your credit.
3. Review your withholding. Take steps now to prevent having to pay more in taxes in April. Depending on the number of pay periods between now and the end of the year, use the IRS Tax Withholding Estimator Tool to determine whether you need to file a new Form W-4 with your employer. Review your most recent pay stub and a copy of your 2018 tax return to help you estimate your 2019 income. If needed, on line 6 of Form W-4, increase the amount of taxes withheld from your paycheck between now and December 31.
4. Spend your FSA. Check your company policy to see if it allows you to carry over up to $500 you haven’t used in your Flexible Spending Account. If the policy doesn’t allow you to carry over, then make sure you spend the dollars in your account because they expire by the end of the month. Getting a dental cleaning or visiting the Optometrist for an eye checkup before the end of the year are just a few last-minute ideas to use your FSA. Go to FSAstore.com for a list of last-minute ideas to use your FSA dollars.
5. Max out your retirement contributions. Now is the time to buildup contributions before the year ends. Just change your contribution amount before you receive your last paychecks of the year. In 2019, you can put up to $19,000 in a 401(k), 403(b), 457, as well as other employer-sponsored plans. If you are 50 or older, the catch-up contribution is an additional $6,000, so you can save a total of $25,000! If you do not have a retirement plan at work, you can deduct up to $6,000 in contributions to an IRA, or $7,000 if you’re 50 or older. Also, if you’re self-employed, freelance, or have a side gig, you can open a Solo 401(k). This account should be opened by December 31. In 2019, you can contribute up to $56,000 ($62,000 if you’re 50 or older) to a solo 401(k) plan; however, your contributions can’t exceed your self-employment income for the year. You have until April 15, 2020, to contribute to a Solo 401(k) and deduct your 2019 contributions.
6. Discuss your finances and estate with your family. While you’re with loved ones during the holidays, it’s a good time to talk to them about your finances, property, and other assets. Talking to loved ones can alleviate disagreements amongst family members should something happen to you. Your family should know where you keep your documents, including your will, healthcare directives, and powers of attorney for finances and healthcare. Also, it’s important to check beneficiary designations on your life insurance policies and retirement accounts like 401(K)s and IRAs. And make sure your Will and Trust are updated.
7. Verify your Social Security. If you experienced a life event that resulted in a name change due to marriage, divorce, or for any other reason, it’s important that your personal information is correctly updated with the Social Security Administration. Make sure your employer has made the necessary changes so you receive proper credit on your earnings record, which will determine your future Social Security benefits.
8. Get your taxes ready. As the year comes to a close, make the upcoming tax season easier on yourself by organizing your pay stubs, receipts, bills, and other files. Also, it’s a great time to look over your expenses from the past 12 months to determine how much you’ve spent as this will help you plan and budget for 2020.
9. Think about your New Year Goals. We often wait until January to make resolutions; however, if you start thinking about your lifestyle, career, as well as your financial resolutions now, you’ll begin the new year and decade determined to achieve your goals.
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Livia Kelly is the author of UNMARRIED and DEBT-FREE. She provides basic, sound and useful information about achieving financial success on your own. Click on the HOME button at the top of this page to learn more.