Financial Fitness

Four Ways to Keep Your Money in Shape

Wealth Manager Debra Taylor, CPA/PFS, JD, of Taylor Financial Group in Franklin Lakes, shares her top four tips for planning a financially prudent 2019.

1) Contribute More to Retirement Plans: “As they get into their 40s, people should be contributing the maximum amount allowed to their employment retirement plans,” Debra says. The IRS has recently increased the maximum amount allowed to $19,000 with a $6,000 “catch-up” contribution for those 50 or older.

2) Roth IRA Plan: A Roth IRA is a special retirement account funded with post-tax income where future withdrawals are tax-free. “Living in a high taxed state like New Jersey makes this especially appealing,” Debra says. “Your IRA grows tax-free, and your qualified tax distribution in retirement is also tax-free.” Contribute the maximum amount possible to build this nest egg, she advises.

3) Open a Health Savings Account (HSA): A healthy couple at age 65 will be spending upwards of $280,000 on health care during retirement, which makes having a Health Savings Account essential. This plan will allow you to get a tax deduction for the money you put in, it will grow tax deferred and when taken out to pay for health care it is tax-free. “These medical expenses are a ticking time bomb,” Debra says. “This is a relatively new plan, and people are starting to take advantage of it.”

4) Review Monthly Budgets: The start of the year is always a good time to sit down and review previous expenses and plan for the coming year. “Put together a plan for what cash flow is going into your basic needs, retirement plans, investments and a Health Savings Account,” Debra says. “You’re tying it all together and making the commitment early so that you’re not waiting until the end of the year when it’s too late.”