Complete These 3 Tasks Before the End of the Year to Secure Your Retirement
- Author: Jeffrey Simmons
- Posted: 2024-07-26
Check Up On Your Social Security Records
The Social Security Department is responsible for handling millions of people's records, so it's no surprise that things slip through the cracks sometimes. Each year, adults are advised to login to their mySocialSecurity.gov account and see what their records say. This can help you identify potential errors that could keep you from maximizing your Social Security benefits.
A common issue is mistakes in your earnings record. The Social Security office is supposed to keep track of all money you paid Social Security taxes for, so they can give you appropriate benefits during your senior years. However, an improperly filled out form or confused employer can keep your previous or current payments from being reported properly. This can mean you end up with a smaller benefit than you are owed.
Each year, go through your Social Security account to see if your past earnings were reported properly and if your current earnings or Social Security benefits are being filed in a timely manner. Since government agencies move slowly, it's important to report any issues as soon as possible. This helps you correct the problem and get your payments as soon as you can.
Max Out Any 401(k) Matching Plans With Your Employer
If you have a workplace 401(k) with matching contributions, it is important to take advantage of this offer. This type of retirement plan lets your employer match the amount you invest each year. Employers typically stop their matching contributions after a certain amount, but it is still very helpful. On average, employer matches over the course of your career can total $333,000. This is basically hundreds of thousands of dollars of free money you could earn.
To get it, you need to contribute funds yourself though. If you are not already adding money to your 401(k), now is the time to start. Going ahead and maxing out matched contributions helps you to avoid leaving free money on the table.
Some offices have different rules for how they calculate matching maximums. Often, there are rules about how much your employer will match per pay period. However, even if you cannot get the full annual contribution, every little bit helps. Try to invest as much money in your 401(k) as possible by the end of the year.
Brush Up on the Rules for Your Retirement Account
401(k) plans, IRA plans, and other retirement plans tend to be complex. December is a good time to look over all the regulations for the relevant plans, so you can make sure you are doing everything correctly. The exact rules you need to focus on will depend on what stage of life you are currently in.
For those who are in their 70s, this is the time of year to look into required minimum distributions (RMDs). Essentially, you have to withdraw a certain amount from your retirement funds each year after a certain age. Failing to withdraw enough can subject you to penalties and fees. Understanding how RMDs work is especially important this year because the rules just changed. Those who were 70.5 years old before 2020 need to deal with RMDs now, while those who didn't reach that age by 2020 do not need to bother with RMDs until they are 72.
If you're still working, it's a good time to take a close look at your current retirement plan contributions. It pays to go ahead and start maxing out your contributions now, even if you technically have until the end of the tax year to invest funds. Getting an early start on it in the end of 2021 will help you better prepare for the future.
A little planning and preparation ensures you are fully prepared for retirement. By being cautious and making the most of your savings, you can create a retirement account for all your living expenses. And when you don't have to worry about your finances, you can better focus on enjoying your golden years.
