Money Matters: 2024 checklist includes debt reduction, IRA contributions

Jeff Witz, CFP

Creating a financial plan allows you to set goals and keep track of financial benchmarks throughout the year. Likewise, creating a year-to-year plan can ensure you are staying on track to accomplish your short-term and long-term goals. Each year, I provide a checklist to get you started on creating a plan. There will be other things you will want to address; however, getting these 8 financial priorities in place is a good start.

Set short- and long-term financial goals. Whether you want to be debt free in 10 years or own a home in 3, you are more inclined to save if you have specific goals. Factor these goals into a budget and figure out where you can squeeze the extra money from to make these goals a reality in the time frame desired.

Budgeting. Every effective financial plan starts with a budget. Identify necessary spending and savings items. Give yourself a little leeway but try to stay disciplined in adhering to your budget.

Emergency funds. These can be a financial lifesaver. A sudden job loss, major surprise expense, or unexpected health issue can change your financial picture quickly. The general rule of thumb is to maintain an emergency fund equal to 3 months’ worth of living expenses if you are a dual-income household and 6 months if you are a single-income household or 1 person’s income is relied upon to provide for the family’s standard of living.

Debt reduction. Look to see whether there is some high-interest debt (like credit cards) that can be paid off. With interest rates at the highest level in a decade, putting money toward high-interest debt is advised. If you were fortunate to lock in low interest rates before the Federal Reserve rate hikes, putting extra money toward low-interest debt may not be the best idea. This money may be better used to pay down high-interest debt or to invest. In general, if you think you can earn a higher rate of return than the interest being charged on your debt by investing that extra money, you should come out ahead in the long run.

Retirement plan contributions. If you already contribute to an employer plan such as a 401(k) or 403(b), keep it going. The Internal Revenue Service increased the maximum contribution amount to $23,000 for 2024 ($30,500 if older than 50 years). 401(k)s and 403(b)s should be maxed out before utilizing other tax-advantaged retirement accounts because they are protected by federal law if you are ever sued and have a judgement against you. If you own your practice, determine whether you are utilizing the best type of retirement plan for your situation.

Traditional and Roth individual retirement accounts (IRAs). If you are already maxing out employer-provided retirement accounts and wish to save additional amounts toward retirement, consider contributing to a traditional or Roth IRA. These accounts also offer excellent tax-advantaged growth and are protected in most states from lawsuits. The contribution limit remains unchanged at $7000 per year for 2024 ($8000 if older than 50 years). Note that deductibility and the ability to contribute are determined by your income, so it is important to be aware of the limitations.

Disability and life insurance. Often overlooked, disability and life insurance are very important components of financial security. Disability insurance supplements a portion of your income in the event you are sick or disabled and unable to work. In the event of a long-term disability, it could ensure you stay in your home and/or are still able to save for financial goals like retirement. All eligible physicians should have comprehensive disability coverage that provides at least 60% of their predisability income. Life insurance is slightly more situational, but if you own a home with a mortgage or have any other debts that would not be absolved at your death, have children whose college educations you would want to guarantee, and/or have an individual or organization you would want to provide for in the event of your death, then life insurance should be considered.

Estate planning. The complexity of an estate plan may vary based on your assets and needs, but having basic estate-planning strategies in place is important. Work with an estate planning attorney to review whether you need wills, powers of attorney, trusts, etc.

Having these 8 important issues well in hand will give you a good foundation to start moving toward a financially secure future. We recommend speaking with your financial adviser about other areas of your financial plan that could use improvement in the coming year.

8750 W. Bryn Mawr Ave. Suite 325 Chicago, Illinois 60631

312-419-3733 - Toll Free 800-883-8555 - Fax 312-332-4908 - www.mediqus.com

Investment advisory services offered through MEDIQUS Asset Advisors, Inc. Securities offered through Ausdal Financial Partners, Inc.Member FINRA/SIPC ∙ 5187 Utica Ridge Rd ∙ Davenport, IA 52807 ∙ 563-326-2064 ∙ MEDIQUS Asset Advisors and Ausdal Financial Partners, Inc. are independently owned and operated.

Effective June 21, 2005, newly issued Internal Revenue Service regulations require that certain types of written advice include a disclaimer. To the extent the preceding message contains written advice relating to a Federal tax issue, the written advice is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer, for the purposes of avoiding Federal tax penalties, and was not written to support the promotion or marketing of the transaction or matters discussed herein.

The information contained in this report is for informational purposes only. Any calculations have been made using techniques we consider reliable but are not guaranteed. Please contact your tax advisor to review this information and to consult with them regarding any questions you may have with respect to this communication.

MEDIQUS Asset Advisors, Inc. does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.