5. Take it to the limit. You can contribute a maximum of $17,500 to your 401(k) in 2014. You must do this by Dec. 31. Your IRA contribution limit is $5,500 in 2014, and you have more time to make it — until the April 15, 2015, tax filing deadline. Take a moment to check your progress and consider increasing your contributions to max out your retirement savings. In 2015, your ability to save for retirement is enhanced when the contribution limit for 401(k)s increases to $18,000. The contribution limit for IRAs is unchanged for 2015.
6. Catch up! If you are over age 50, take advantage of catch-up contributions that allow you to add $5,500 more to your 401(k) and $1,000 more to your IRA in 2014. In 2015, 401(k) catch-ups increase to $6,000. That means individuals 50 and older can set aside as much as $24,000 in their 401(k) next year.
7. Review your beneficiary designations. Perhaps you’ve gotten married, remarried or unmarried in the past year. Maybe you’ve had children. Life is a journey, and things change along the way. But the beneficiary designations on your important accounts do not change without you taking action. Talk to your advisor about not only your retirement account beneficiaries, but those on your life insurance policies as well.
8. Check and (re)balance. When some of the investments in your retirement account grow more than others, you may find that the mix of stocks and bonds you had established at the start of the year is now quite different. You’ll want to rebalance back to your intended asset allocation, which presumably is consistent with your retirement time horizon and appetite for market risk.
Finally, I would be remiss if I didn’t mention the most obvious and best advice of all: Meet with your financial advisor each year to review your retirement investment portfolio and to consider how it is doing in getting you toward your savings goal. BlackRock’s Investor Pulse Survey found that the most effective savers and investors are 2.5 times more likely to use financial professionals to help them make investment decisions; they also have accumulated 2.5 times the retirement savings of other Americas. If I’m putting 2 and 2 (or 2.5 and 2.5) together, seems to me that working with an advisor is a good call — at any time of year.
Rob Kron, Managing Director, is the head of Investment and Retirement Education for BlackRock’s U.S. Wealth Advisory group. He provides practical information on topics that are important to every saver and investor of every age. You can find more from Rob here.