Increase contributions to retirement savings as a New Year’s resolution

Are you thinking about making resolutions for the upcoming year 2023? If so, remember that your resolutions will impact your retirement security and Thrift Savings Plan. If you want to enhance your financial situation in 2023 and the future, you might just need to take one little step as compared to many New Year’s resolutions that require constant work (such as dieting, exercising, etc.).

Your typical New Year’s resolution demands that you exercise regularly and carefully manage your diet to lose weight and firm up (let’s say you want to lose 25 pounds by summer so you can fit into that gorgeous swimming suit you found on sale).

Your New Year’s resolution can be to achieve a certain TSP savings amount. This requires far less work and provides a possible financial gain.

You can start by increasing your contribution amount. The voluntary deferral amount for 2023 is $22,500 per year, or $30,000 per year if you are 50 or older or will be in that year. If your contribution rate increases, it will take effect with the next pay period and stay in effect until you change it again. What you need to do is take one step to keep benefiting from itâ€â€a “set and forget” situation. You can withdraw more money in the future if you invest more money today.

If you are a FERS employee, you must also make sure that you contribute at least 5% of your income to the TSP. Despite it being difficult to believe, 10% of FERS employees don’t participate in the plan, and most don’t contribute the requisite 5% minimum to be eligible for the full government match.

Third, go back and review your contributions and account allocations. If you are close to retiring and still have all of your money invested in stock funds (C, S, and I), you might want to consider whether the level of risk you are taking is appropriate for you. You might want to speak with a financial professional familiar with the TSP. Alternatively, you might consider one of the TSP’s lifecycle (L) funds.

Fourth, be aware that the fact that you are fully funding your TSP account does not affect in any way your ability to make contributions to an Individual Retirement Account (IRA). You may be unable to contribute to a traditional IRA account or even a Roth IRA if your salary is high. Although you can still contribute to a Traditional IRA that is not tax deductible.

In 2023, you are permitted to contribute $6,500 to an IRA, plus an additional $1,000 if you are 50 years or older. Consider using direct debit from a bank account to guarantee that you contribute monthly to your IRA.

Fifth, realize that the one instrument you have to affect your retirement income is your TSP. The TSP is fully voluntary, but Social Security and your pension (CSRS or FERS) are necessary. You are free to decide.

Sixth, ensure to rebalance your portfolio. There are always ups and downs in the stock market. Some industries perform better than others, and vice versa. Since 2022 was extremely bad for most of them, the sectors that performed best last year likely won’t have a repeat performance this year. You can take steps to lock in profits from the sectors with the strongest returns and buy shares in the sectors that have lagged behind last year’s leaders by rebalancing your portfolio to its initial or updated asset allocation.

What Are Some Ways to Keep Financial Resolutions?

Setting reasonable goals and keeping in mind your motivation for making the resolution when you’re tempted to break it are the keys to success. Having a portion of your income routinely placed into a savings account or moving money from a checking account to a separate investment or savings account that is not immediately accessible can also help stop the temptation.

Start 2023 with the goal of improving your financial situation for retirement!

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Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely withhelping them pursue the most comfortable financial life possible.Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.Aaron can help you and your family to create, preserve and protect your legacy.That’s making a difference.

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