The start of a new year is a good time to focus on financial matters. And it pays to carve out some time at the beginning of 2024 to tackle a few key retirement moves.
This holds true whether you're a few years away from wrapping up your career or still have decades to go. Here are a few specific tasks worth tackling in January.
1. Increase your retirement savings rate
Getting a raise at work isn't a given. But if your pay is going up in 2024, then one thing it pays to do is increase your savings rate in your 401(k) plan as early as possible.
Why does this have to get done in January? Once you start getting used to larger paychecks, it's apt to be harder to part with the money you've come to enjoy spending.
But if you send that raise into your 401(k) from the start, you won't miss it. At the same time, you'll be doing your part to set yourself up with more income in the future.
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2. Check your retirement plan investments
The money in your IRA or 401(k) plan is hopefully not just sitting in cash, since you do want it to grow. But it's important to make sure your savings are invested appropriately, given your age.
If you're within a handful of years until retirement, now's the time to start scaling back on stocks and shifting over to assets that tend to be less volatile, like bonds. However, if you're only in your 30s or 40s and don't intend to retire until your 60s, go heavy on stocks while you can.
You might see the value of your portfolio rise and fall from year to year over the next several decades. But in that case, you have time to ride out market downturns.
3. Fund an HSA if your health insurance is compatible
Health savings accounts (HSAs) are one the best long-term savings plans out there because they're triple tax-advantaged.
- HSA contributions go in tax-free
- Unused funds that are invested enjoy tax-free growth
- Withdrawals are tax-free when used to cover qualified medical expenses
In 2024, you'll be able to participate in an HSA if your health plan:
- Has a minimum deductible of $1,600 for self-only coverage, or $3,200 for family coverage
- Has an out-of-pocket maximum of $8,050 for self-only coverage, or $16,100 for family coverage
Your health plan may not have been HSA-compatible in 2023, but if you're moving to a new plan in 2024, you may be eligible to participate. If so, try to contribute funds that you can then invest and carry with you into retirement, when your healthcare costs might be far greater than they are today.
You don't necessarily need to open an HSA through your employer. If one isn't available, you can open an HSA independently at any financial institution that offers these plans.
The moves you make at the start of 2024 could set you up for a secure retirement down the line. Take a little time to tackle these items in January. You'll be thankful you did in the long run.
