it: You probably could have done more in 2015 to help
your retirement picture, and you werenít alone. A
Capital One Bank survey released in December found that
only a third of respondents accomplished their financial
goals last year.
whether youíre retired or just starting to save, thereís
always this year. In 2016, you can double down on IRA
contributions, lock in a tax-free charitable donation
and make some big dents in your spending, among other
IRA contributions is one of the few provisions left in
the tax code that you can do early in the new year to
affect last yearís taxes," said Ed Slott, an
accountant who produces IRA training workshops for
financial advisers and consumers.
youíre at it, he said, consider tossing a contribution
for 2016 into a traditional or Roth IRA, whichever makes
the most sense given your age and tax situation.
you can go one step further, do a contribution for 2016
early in the year. You can wait until April of 2017, but
then youíre back in the same rut," he said.
"If you can double up in one year, then youíre
always ahead and that tax-deferred money builds up over
youíre past age 70 1/2 this year, taking your required
traditional IRA or 401(k) distribution early could also
make sense, he said. It means youíll avoid the
year-end rush some financial institutions experience as
people scramble to take their distributions, which can
lead to administrative errors, he said.
if you donate to charitable organizations, Congress has
made permanent the ability to give to charities through
your IRA, have it count toward your required
distribution, and not have it affect your adjusted gross
income. Now you can make a gift early in the year and
bank the tax advantage, Slott said. Previously, when the
provision was extended very late in the year, IRA
holders typically had already taken their distributions,
so for many the provision didnít do much good, he
bit of permitted retirement-account hindsight involves
undoing conversions of traditional IRA money to Roth
IRAs. If you converted some funds in 2015, but the
market goes south and youíd rather not pay income
taxes on the original value, you have until October to
recharacterize the conversion, Slott said.
one of the great second chances in the tax code,"
he said. "Itís like being able to bet on a horse
after the race is over."
tax move for 2016 is to plan on delaying taking Social
Security benefits until age 70, Slott said, particularly
now that the ability to suspend one benefit while
collecting the associated spousal benefit and the
ability to choose between spousal and worker benefits at
full retirement age is being phased out. The tax bonus,
he said, comes because as you withdraw more retirement
savings in your 60s while waiting to start benefits, you
are spending down your retirement savings, which could
mean lower taxable distributions in the future, he said.
you took benefits early, consider suspending them at
full retirement age, said Jane Bryant Quinn, author of
"How to Make Your Money Last: The Indispensable
Retirement Guide." You earn delayed retirement
credits through age 70.
out some major expenses, like a too-large home, is a
much better move for retirement than nickel-and-diming
yourself, she said. "The big things are where the
money is. Once youíve right-sized the big expenses,
you wonít need to worry about drinking cheaper
coffee," she said.
also advocates a combination of immediate, fixed
annuities within a fixed income strategy and a rising
amount of stock index funds as retirees age (up to a
ceiling that suits your risk tolerance), reflecting some
new research showing that increasing the amount of
equities helps retirees stay ahead of inflation.
getting more aggressive myself, increasing my exposure
to equities over the past few years, and I havenít
regretted it, even though of course the market at some
point will go down," Quinn said.