For better or worse, 2020 is almost behind us. And while that’s a good thing from a mental health standpoint (let’s face it … we all want to end this year), it also means that time is running out to secure your retirement. Here are some important moves that are worth doing before 2020 comes to an end.
1. Pad your IRA
It is probably too late to put more money into your 401 (k) plan, since this change needs to go through the job’s payroll department. In addition, you technically have until next year’s tax filing deadline to finish financing your IRA.
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But it is still worth filling out your IRA now, instead of waiting. The reason? The coming months can be quite bleak in front of the pandemic, and it is not uncommon to shop as a means of comfort. Or you can buy it because of boredom – a winter spent at home will do it for you. Either way, if you have extra money at your disposal, it would be wise to save it for retirement before you are tempted to spend it.
By the way, putting more money into an IRA – a traditional IRA, anyway – will also reduce your tax bill for the year. This could help you get a bigger refund in 2021 or owe less money to the IRS if you underpaid your taxes this year.
2. Check your Social Security income statement
Each year, the Social Security Administration (SSA) issues a statement of income to all workers with a summary of their taxable wages for the year. If the information in this statement is incorrect, it may result in a lower retirement benefit; therefore, if you have not verified your most recent statement, make sure to finish it next week.
If you are 60 or older, you must have received a copy of that document in the mail. If you are younger, you will need to create an account on the SSA website to access it there.
Your Social Security income statement will also include an estimate of your monthly benefit at full retirement age. The closer you are to retirement, the more accurate the estimate will be, but even if you are younger, it will be useful information to keep in mind.
3. Increase your contribution to the health savings account
Like IRAs, HSAs give you until the tax return deadline to make contributions, so technically, you have until April 2021 to fund yours for fiscal 2020. But again, if you’re sitting on the extra money, it’s worth putting it in your HSA to avoid the temptation to spend it.
You can consider an HSA more like a short-term account than a retirement plan, since you can make withdrawals at any time to pay for medical expenses. But the best way to make good use of an HSA is to put in more money than you need right away, invest the extra amount and carry a retirement balance, when healthcare can consume an uncomfortably large part of your senior income.
Even if you don’t plan to leave the job market for a long time, the changes you make at the end of the year can set you up for a more comfortable retirement in the future. As we celebrate the end of 2020, try to fulfill these important tasks. You will be very grateful for doing this.