​​Countdown to 2024: Optimize Your Retirement with Five Year-End Steps

If you’re a professional, executive, or business owner in Texas living in the San Antonio area and preparing to retire in 2024, congratulations!  As you prepare to close one chapter of your life and start a new one, there are many considerations for you to think about.  One of the biggest and most important considerations is associated with your retirement planning efforts that will guide you during the next phase of your life. 

2024 could be an interesting year for investors.  There is a lot to think about between persistent inflation, global instability, and securities market volatility.  A presidential election year can add another layer of uncertainty to an already volatile marketplace, it will be important for you to have a comprehensive retirement plan that factors in the expected and the unexpected.   You don’t want to retire without a well-thought-out game plan.  

As 2023 winds down, this article will provide you with five year-end financial tactics you can use in 2023 that will assist in your retirement planning for 2024.  

From year-end tax planning to maximizing contributions to tax-advantaged accounts to charitable planning, your decisions before you retire can significantly impact your transition from working to the golden years of retirement.

Strategic Year-End Tax Moves

Strategy #1: Contributing to tax-deferred retirement accounts before the end of the year is one way to boost your retirement contributions while you are still working and reduce your taxable income. Think of it as a way to help you keep more of your hard-earned money until you are ready to withdraw those funds after you retire.

Here are the IRS-approved contribution limits for 2023: 

  • If you have a 401(k), 403(b), or similar plan, the maximum contribution you can make in 2023 is $22,500
    • You can contribute an additional $7,500 as a catch-up contribution if you are 50 or older
  • If you have an IRA, the yearly contribution cap is $6,500 in 2023
    • If you’re 50 or older, you can contribute an additional $1,000
  • If you have a SIMPLE IRA, you can contribute up to $3,500

Watch our latest video: You’ve Made It to Retirement! How PAX Can Help with the Transition

Strategy #2: Health Savings Accounts (HSAs) can offer unique advantages because contributions are tax-deductible, which can reduce your taxable income for that year.  Additionally, interest or investment gains in the account accumulate tax-free. You can also rollover funds from year to year, which, over time, allows you to build a substantial balance for future medical needs while enjoying the tax benefits associated with the account. 

  • In 2023, you can contribute $3,850 as an individual or $7,750 if you have an HSA for your family needs
    • If you are 55 or older, you can contribute an additional $1,000 as a catch-up contribution

Strategy #3: Another tax tactic you can use between now and the end of the year is to consider converting funds from a traditional IRA to a Roth IRA.  

This might be advantageous for several important reasons:  

If you believe you will be in a higher tax bracket in the future, you may want to pay taxes now while you are in a lower tax bracket. Roth IRAs offer tax-free growth and tax-free withdrawals in retirement, unlike traditional IRAs, which taxes withdrawals. 

Roth IRAs don’t have required minimum distributions (RMDs), providing you greater flexibility in retirement to manage your income and the associated tax liabilities. 

Given the uncertainty surrounding the markets in an election year, a Roth IRA gives you more flexibility for diversifying your tax liabilities in retirement, providing more control over your tax situation. 

Working with a CERTIFIED FINANCIAL PLANNER™ in San Antonio can guide you through all options to maximize your income and minimize your tax liabilities, both now and in the future.

Strategy #4: Plan what you will do with your 401(k) (or similar plan) balance once you retire.  You can certainly leave your 401(k) plan where it is post-retirement, but that strategy carries its own set of risks:

  • The market exposure of your existing investment options may not align with your reduced risk tolerance once you enter your retirement years.
  • Regardless of where your assets are invested, you will still be required to make required minimum distributions (RMDs) starting at age 72. These withdrawals could push you into a higher tax bracket. 
  • There’s also the administrative hassle; juggling multiple 401(k)s from different employers can be complicated and costly. You should coordinate all of your investment accounts so you do not take excessive risk.
  • Your 401(k) plan may have investment limitations that could increase risk or reduce returns during higher inflation and securities market volatility. 

Strategy #5:  Consider working with a team of San Antonio CFP ® professionals who specialize in providing retirement planning, tax planning, and investment management services.  At PAX Financial Group, we’re more than just a financial advisory firm; we’re a partner that helps you pursue your financial goals before and after retirement. 

Our comprehensive services cover everything you need: evaluating your current financial situation, retirement planning, managing your investments, tax planning, and answering your insurance and personal finance questions. 

Giving back to the community is close to our hearts, and we proudly integrate Judeo Christian principles into every facet of our work. Our mission is to align with you in crafting a solid plan that reflects your values and helps you pursue the goals that matter the most to you.

Located in San Antonio, our team of experienced CFP ® professionals can craft a retirement plan using our PIVOT Retirement Planning™ process.  Our goal is to provide a level of service that makes your retirement as rewarding as possible financially, emotionally, and philanthropically. Our ultimate goal is to make your golden years as rewarding as possible.

We invite you to connect with us to discuss your year-end tax planning and 2024 retirement planning assistance. 

This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Biblically Responsible Investing (“BRI”) involves, among other things, screening for companies that fit within the goal of investing in companies aligned with biblical values. Such screens may serve to reduce the pool of high performing companies considered for investment. Investing involves risk. BRI investing does not guarantee a favorable investment outcome. PAX Financial Group has conducted due diligence for their Biblically Responsible Investing (BRI) process and proudly serves as each client’s advocate using fully vetted third-party specialists for the administration of BRI methodology. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product and should not be relied upon as such.

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