Prioritizing and Planning for a Successful 2023
By: Jamie Stone, Chief Planning Officer
“The best thing about the future is that it comes one day at a time.” —Abraham Lincoln
As we begin a New Year, many of us have a desire to accomplish or do certain things during the year ahead. These “resolutions” can come fast and furious – exercise more, eat better, save for the future, spend more time with family, establish a good habit, break a bad habit, etc.
While I will bring some specific things to consider doing in 2023, I wanted to start with an encouragement to not be overwhelmed by a multitude of “resolutions” but rather to focus on getting started with what you want to do. As my college coach used to say, “You can eat an elephant one bite at a time!” (I appreciate this advice now but, admittedly, didn’t receive it well as a 20-year-old know-it-all). Take small steps toward the goals you have and let the effects of those steps compound over time.
With that in mind, here are a few specifics for things to do to help your plan in 2023. It is important to note that on December 29, 2022, President Biden signed SECURE Act 2.0 into law, which was previously approved by Congress. Many of the changes are for 2024 or later but relevant changes for 2023 have been incorporated below, and we will share a future article regarding more of the specifics of this law.
1. Update and review your financial plan.
Life happens and things change. Much like a ship at sea must make many small course corrections over its journey to reach its desired destination, we want to be sure our plan is plotting the right course. Small changes now can avoid the need for large changes later in your plan. What are the things that can be done now to prioritize your time and resources, now and in the future? Contact your advisor to schedule this planning meeting.
2. Review your retirement contributions.
If you are maximizing your retirement plan contributions, be aware of the increased limits for 2023, found here. Keep in mind that, if you are over age 50, there is an increased catch-up contribution as well. It’s also important to determine if some or all of your contributions will be pre-tax or Roth (after-tax). Beginning in 2023, SEP and SIMPLE IRAs will allow for Roth contributions, and an employer can elect to make matching or non-elective contributions to an employee’s Roth account.
If you are not currently maximizing your retirement plan contributions, consider increasing your contributions. Even a 1% increase can make a significant impact over time.
3. Consider other financial and tax planning details regarding your retirement accounts.
For example, if you are turning 72 in 2023, the Required Minimum Distribution (RMD) age has changed to 73, meaning you won’t have a distribution required in 2023.
If you are considering or planning a Roth conversion for 2023, be sure to track all income or distributions throughout the year. While conversions often happen at the end of a year, it’s important to know what the total income has been for the year to maximize the tax efficiency of the conversion. Contact your advisor to help develop or update your 2023 tax plan.
4. Review and update your estate plan.
Review or establish your last will and testament or trust, financial power(s) of attorney and advanced health care directive(s). Also review and update beneficiary designations for each of your accounts (life insurance policies, retirement accounts, etc.). Beneficiary designations may overrule any plans you have formalized via your will, which is why it’s incredibly important to ensure your beneficiary designations are accurate and up to date. Estate planning needs will vary by person, so be sure to work with your attorney to make certain you have the appropriate vehicles in place to ensure your final wishes will be honored.
Consider that time is our most precious commodity. It’s important to prioritize or “spend” time where it’s most valuable. What matters the most today? Tomorrow? In a week? In a month? In a year? In 20 years? I believe this is the best place to start developing plans or “resolutions” for this year and beyond.
I would also encourage you to know your “Team.” Who are the people or organizations that help you navigate through the priorities of your life? This is different for every person but could include family, tax professionals, wealth managers, financial planners, legal advisors, estate attorneys, and your church. If you’re not clear who your Team is, make a list and write down what they help with. Reference this list as you work through the priorities of your plan. If you feel there’s an area missing on your Team, reach out to a trusted member of your Team for a referral to fill in that gap. Your Team is there to help share the burden of developing your plan, and it is incumbent on all of us to use the resources we have.
I wish all of you a happy and successful 2023! And thank you for making Means Wealth part of your Team. We are here to help with your financial priorities in the year(s) ahead, over the lifetime of your plan, and beyond, to future generations. If you have questions or need clarification about your plan, please don’t hesitate to reach out to us.
