As the leaves turn color and the air gets crisp, it’s not just pumpkin patches and cozy sweaters you should be thinking about—fall is the ideal time to take charge of your financial future. With the year’s finish line in sight, it’s time to make sure your 401(k) is working as hard as you are.
Here are several actionable power moves that will boost your retirement savings before December 31st.
Pump Up Your Contributions
Imagine wrapping up the year knowing you’ve set your future self up for success! One of the simplest yet most impactful steps you can take before the year ends is to boost your 401(k) contributions. In 2024, the IRS allows employees to contribute up to $23,000 to their 401(k) —and if you haven’t hit that number yet, now’s the time to ramp it up! Even a small bump in your percentage can make a big difference, especially if your employer matches your contributions.
For those over 50, take advantage of the “catch-up” contribution allowance. You’re allowed to contribute an additional $7,500 on top of the standard limit. That’s an extra $30,500 you could be tucking away for your future in 2024!
Plan for Year-End Bonuses
Fall is often a season for planning year-end bonuses or extra income opportunities. Consider using part of your bonus to increase your 401(k) contributions. Some companies allow you to allocate a portion of your bonus directly into your 401(k), providing another opportunity to save while lowering your taxable income. If your employer allows it, contribute the bonus to your 401(k) and ensure you’re taking full advantage of any matching programs.
A bonus can be tempting to splurge on items from your wishlist. While this brings momentary financial freedom, it can be used up quickly. If this sounds like you, try going 50/50. “Present-day you” can enjoy a few items from your wishlist, while “future-you” can invest and take advantage of compound interest.
Max Out on Employer Match
Oftentimes fall is a common time for benefit enrollment, and if you’re already enrolled, a time for you to make changes to your current benefit elections. Be sure to check if your employer offers a matching contribution. This is the perfect time to revisit your 401(k) and make sure you’re contributing enough to get the full match.
For example, if your employer matches 50% of your contributions up to 6% of your salary, make sure you’re contributing at least 6% to get that extra boost. This can significantly grow your retirement fund over time with minimal extra effort. If your employer offers a matching contribution, don’t let any of it slip through your fingers.
Give Your 401(k) a Tune-Up
Just like your favorite fall sweater needs a good refresh every now and then, so does your 401(k) portfolio. Markets shift, your life changes, and your investment strategy should evolve too. Take a moment to review your asset allocation and make sure it’s still aligned with your retirement goals. Has your risk tolerance changed, or have certain investments outperformed others?
If you’ve experienced significant life changes this year, such as a new job, marriage, or the birth of a child, it’s even more important to reassess your strategy and adjust your 401(k) investments accordingly.
Rake in the Tax Benefits
Contributing to your 401(k) has a dual benefit: not only are you building your retirement nest egg, but you’re also slashing your tax bill. By contributing pre-tax dollars to your 401(k), you reduce the amount of income subject to federal income tax.
This is particularly beneficial if you find yourself in a higher tax bracket than anticipated. If you’re hovering near the edge of a higher tax bracket, increasing your contributions now could be the key to saving even more. Boosting your 401(k) contributions can push you into a lower tax bracket, providing immediate tax savings while helping you secure your future.
Catch Up on Missed Contributions
If you started the year with financial goals that included retirement savings but haven’t been able to contribute as much as you wanted, fall can serve as a wake-up call to catch up. Many companies allow you to adjust your contribution rates at any time, so it’s worth increasing your percentage now to make up for lost time. Login here to change your contribution rate.
This might also be a good time to review your spending habits, cut back on unnecessary expenses, and redirect those savings into your 401(k).
The Seasonal Shift
As the year-end deadline for 401(k) contributions approaches, now is the time to take stock of your progress and make any necessary adjustments. Whether you’re behind on your contributions or looking to maximize the advantages available, the fall season offers a prime opportunity to set yourself up for long-term success.
By following these tips, you can make the most of your 401(k) and take one step closer to a secure, comfortable retirement. So, grab a cup of warm apple cider, review your 401(k), and fall into savings this season!
