By State Treasurer Clint Zweifel
Our day to day lives keep us very busy. And when we’re busy, we tend to focus on things which are immediately in front of us. It’s perfectly understandable, but it can be dangerous when we consider the planning and preparation it takes to make consistent, sound financial decisions. So as 2015 comes to an end, think about some of the simple yet meaningful things you can do to keep your fiscal house in order for the New Year and beyond.
- Make an end-of-year contribution to your MOST 529 college savings account. Missourians can deduct up to $8,000 annually, or $16,000 for married couples filing jointly, and savings grow tax deferred. Learn more at MissouriMost.org.
- Remember that the holiday season is a time for giving—and you can use that to your advantage. Donating to charity is the right thing to do, but it can also benefit you in the form of a tax deduction. You can even deduct from your taxes the value of donated appreciated assets, such as stocks.
- While examining your portfolio for those appreciated assets, look more broadly at your investments: do they still reflect your goals? If some of your asset categories have shifted above or below your target, you may need to rebalance to stay in line with your goals and risk preferences. However, don’t check your investments too often. Studies show that the more frequently individuals look at their investments, the more likely they are to sell during a downturn of the market. Sometimes less is better.
- It’s a good idea every year to streamline your insurance costs. Spend some time examining your insurance policies and make sure you have only what you need: don’t overpay for unnecessary coverage or services. If you are a homeowner, make sure your house is covered for the cost to rebuild, not just the market value. You should also closely consider every type of insurance you might need, including flood and earthquake coverage.
- Check for any Unclaimed Property at ShowMeMoney.com. It is easy and free of charge.
- Build a financial safety net for you and your family. This doesn’t need to happen overnight, and the objectives of the safety net will vary depending on your circumstances. Someone with a steady job might be able to get by with three months of living expenses, while a self-employed individual might need a larger cushion. Start off 2016 right by adding whatever you can to your savings now.
- Most importantly, retirement. For many of us, the concept is so distant that we fail to start planning early. Don’t fall into this trap. In the current state of retirement, personal savings and defined contribution plans are more important than ever before. If you can, max out your contributions to your preferred retirement savings vehicle, especially if it comes with an employer match. Today many 401Ks can be set up to increase automatically every year. Even a small annual increase of a half percent adds up over time. If you have an IRA, have your contribution deducted from your paycheck automatically. Every dollar saved today is one you will have when it counts the most.
Some of these goals may sound overwhelming, but don’t let that keep you from ever getting started. Remember it is never too late to save, so start at a reasonable level, say three to five percent of your monthly income, and aim to increase it every year. It is always better to reach part of your goals than none at all. It gets easier with practice, and every dollar saved furthers each of your goals over time.
About MOST 529
State Treasurer Clint Zweifel sponsors MOST 529, a tax-advantaged program that enables families to save for a child’s higher education. MOST 529 is an affordable, low-cost, tax-deferred way to save for higher education expenses. Investments in the plan can be used towards qualified higher education expenses, including tuition, certain room and board expenses, books and mandatory fees at most four-year colleges and universities, many two-year institutions and vocational schools, and some schools abroad. In addition, savings in MOST 529 can be used towards associate’s, bachelor’s, and advanced degrees. Account owners may deduct up to $8,000 in contributions each year in computing their Missouri state income tax and married couples filing jointly may deduct up to $16,000 annually. Contributions to the Plan in a tax year are deductible from Missouri state income tax up to certain limits, but may be subject to recapture in subsequent years if you make a nonqualified withdrawal.
Investment returns are not guaranteed, and you could lose money by investing in the Plan.
Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.
Investment objectives, risks, charges, expenses, and other important information are included in this document; read and consider it carefully before investing. Vanguard Marketing Corporation, Distributor and Underwriter.
If you are not a Missouri taxpayer, consider before investing whether your or the designated beneficiary’s home state offers any state tax or other benefits that are only available for investments in such state’s qualified tuition program.
The Missouri Higher Education Savings Program (the “Program Trust”) is a trust created by the State of Missouri. When you invest in MOST—Missouri’s 529 College Savings Plan (the “Plan”), you are purchasing portfolio units issued by the Program Trust. Portfolio units are municipal securities. The Plan has been implemented and is administered by the Missouri Higher Education Savings Program Board (the “Board”). Ascensus Broker Dealer Services, Inc., and Ascensus Investment Advisors, LLC, serve as the Program Manager and Recordkeeping and Servicing Agent, respectively, with overall responsibility for the day-to-day operations. The Vanguard Group, Inc., serves as Investment Manager for the Plan. Vanguard Marketing Corporation, an affiliate of The Vanguard Group, Inc., markets and distributes the Plan. The Plan’s portfolios, although they invest in mutual funds, are not mutual funds.