Managing your wealth involves juggling many moving parts, and it can feel overwhelming. Rather than trying to think about it all at once, consider breaking it down into component parts, and take care of a few at a time.
We’ve designed this month-by-month Wealth Planning Guide to help you get everything done — with less stress
January
Define Your Wealth Goals
The beginning of a new calendar year is an excellent time to pause, take stock, and decide what wealth goals you’d like to achieve in the next 12 months. Maybe you want to pay down debt, or develop a comprehensive legacy plan, or take concrete steps towards an early retirement.
No matter your goals for this year, we invite you to use two strategies we believe should increase your likelihood of success. First, write them down somewhere you’ll see them regularly. Second, make a plan for how you'll achieve them. The more you can break your goals down into easy action steps, we think the more likely you’ll be to reach December with achievements you can be proud of.
Pay the First Set of Your Estimated Taxes
If your payroll withholdings aren’t sufficient to cover your tax payments, send your estimated payment to the IRS for money earned between September 1st and December 31st of last year. Note that this covers four months, not three! This is your last payment for the tax year, so it’s also your last chance to catch up before filing your tax return in April.
Read Your First Quarterly Strategy Writeup (Fool Wealth Clients)
We believe in transparency. To that end, our Portfolio Managers review all of our investing strategies every quarter to ensure that you understand what we’re investing in and why — and how we’ve performed. Our most recent quarterly writeup, including a letter from Nick Crow, CFA®, President of Motley Fool Wealth Management, is out this month.
February
Organize Your Tax Documents
The IRS requires most tax forms to be delivered to you by January 31st, so it’s a perfect time to pull together all of the documents you need to do your taxes, including W-2s, 1099s, and receipts for any deductions, such as charitable donations or medical expenses.
If you’re hiring a CPA to file your taxes, get your documents to them sooner than later — it should make them more likely to be able to file by the April 15 deadline.
Get Romantic With A Spousal IRA
When your spouse says they want something special for Valentine’s Day, ditch the chocolates and consider the ultimate gift: a shot at retirement security. If one spouse is working and the other is not, the non-working spouse is still eligible to contribute to a Spousal IRA. This is a special rule, since normally a taxpayer is required to have earned income to contribute to an IRA. And, it can help non-working spouses accumulate retirement savings that are otherwise reserved for income-earners.
March
Check Yourself On "Lifestyle Creep"
According to LinkedIn, March is the most popular month for employers to pay out bonuses.1 Many people have spent that money before even receiving it, but you’re no (lowercase f) fool. Rather than incorporating your bonus into your ongoing spending, consider saving a portion before splurging on the fun stuff. This can get you closer to retirement in two ways: first, you’re adding to that all-important nest egg, and second, you’re limiting the upward creep on what it takes to maintain your lifestyle.
Review Your 401(k) and Other Employer Contribution Plans
In 2024, employees can contribute up to $23,000 to 401(k) plans and 403(b) plans if you’re under 50, and $30,500 if you’re 50 or better.2 Review your contributions to ensure you’re setting aside enough to meet your retirement goals. If your employer offers a retirement contribution match, double check that you’re taking advantage of as much of it as you reasonably can.
And, since it’s Women’s History Month, we thought it would be worth mentioning that the catch-up contribution to retirement plans was originally conceived as part of the The Economic Growth and Tax Relief Reconciliation Act as a way to help women in particular save for retirement.3 Thanks, ladies!
Link Your External Bank Account (Fool Wealth Clients)
If you plan to deposit money into your managed account at Interactive Brokers, linking your external bank account to your client profile will let you initiate ACH deposits directly from our platform into your account. All you need is your bank’s routing number and your account number. On your client dashboard, choose the appropriate account and click the Deposit tab, then follow the instructions. Unfortunately, this feature isn’t yet available for managed accounts held at Schwab.
April
Celebrate Tax Freedom Day
Tax Freedom Day, not to be confused with the tax deadline in the U.S., usually falls around mid-April. This is the date the Tax Foundation estimates the average U.S. taxpayer would pay their tax burden (state, local, and federal) if everything they earned was paid in taxes starting January 1st. Getting to keep some dollars in your pocket after this date is certainly worth a celebration.
Catch Up On Last Year's Retirement Contributions
If you haven’t maxed out your contributions to your Roth or your traditional IRA for 2023, you have until tax day to add more funds. Since every tax year has limits on how much you can contribute, putting 2024 dollars into 2023 contributions ensures that should you receive a bonus, a tax refund, or any other windfall, you’ll be able to sock at least part of it away for your future.
Not sure if this is the right strategy for you? Our guide can walk you through it.
Pay the Second Set of Your Estimated Taxes and File Annual tax Returns
If your payroll withholdings aren’t sufficient to cover your tax payments, send your estimated payment to the IRS for money earned between January 1st and March 31st.
It’s also time to file your annual tax return — or an extension. If you’re not filing an extension, the IRS expects you to pay anything you owe for the 2023 tax year by the April 15th deadline.
Read Your Second Quarterly Strategy Writeup (Fool Wealth Clients)
We believe in transparency. To that end, our Portfolio Managers review all of our investing strategies every quarter to ensure that you understand what we’re investing in and why — and how we’ve performed. Our most recent quarterly writeup, including a letter from Nick Crow, CFA®, President of Motley Fool Wealth Management, is out this month.
May
Confirm 529 Plan Deduction Eligibility
If you’re contributing to a college savings plan, also known as a 529 Plan, check to see if your state allows you to deduct those contributions. If there isn’t a deduction, consider moving to one of the plans Morningstar rates highly in its annual review.
With the latest tax change, known as SECURE Act 2.0, excess savings in 529 Plans could be eligible to be converted to a Roth IRA. That’s along with previous changes that expanded the use of 529 Plans to include payment for secondary tuition and paying down student loans. This has truly become a flexible and potentially powerful savings vehicle for parents and grandparents.
Review Your Wealth Goals
You’re a third of the way through the year, and it’s a good time to check in on your progress towards the wealth goals you identified in January. Is your plan working? Do you need to change how you’re going about achieving your goals? Do the goals themselves need to change?
We set goals to help us build the life we want, and sometimes circumstances change. It’s always okay to update your goals to match what’s happening now.
June
Pay the Third Set of Your Estimated Taxes
If your payroll withholdings aren’t sufficient to cover your tax payments, send your estimated payment to the IRS for money earned between April 1st and May 31st. Note that this covers two months, not three!
Open or Add Deposits to an IRA
If you already have an IRA, consider adding funds. The 2024 limit is $7,000 for those under 50 and $8,000 for those 50 and above.4
If you don’t yet have an IRA, consider opening one, especially if you anticipate landing in a lower tax bracket as you age. Depositing money in an IRA may lower your current tax bill, all else being equal, and the money will be able to grow tax-free until you take it out.
Plan Your Required Minimum Distributions
While you’re required to take minimum distributions from sponsored retirement plans and traditional IRAs accounts by the end of every calendar year, you don’t have to wait until December. Identifying how much you need to withdraw, how you’d like to do it (lump sum or in increments), and what market conditions you’d prefer to do it in can help you optimize your distributions. And don’t forget that you don’t have to spend that money! You can reinvest it for your future.
July
Add Transfer On Death to Your Taxable Accounts
You’ve probably named beneficiaries for many of your accounts, including your 401(k), your IRA, and your life insurance. But did you know you can do the same for your brokerage accounts?
It’s called Transfer On Death (TOD), and it exempts those accounts from a lengthy probate process. It doesn’t exempt the accounts from being treated as part of your estate, including settling any debts, but it can ease the executor process for your heirs. Ask your bank or brokerage for a beneficiary form.
Review and Update Your Fool Wealth Investor Profile (Fool Wealth Clients)
Keep us up to date by reviewing your Client Profile and making sure any changes that have happened in your life are reflected in your profile. The more we know, the better we can serve you.
Read Your Third Quarterly Strategy Writeup (Fool Wealth Clients)
We believe in transparency. To that end, our Portfolio Managers review all of our investing strategies every quarter to ensure that you understand what we’re investing in and why — and how we’ve performed. Our most recent quarterly writeup, including a letter from Nick Crow, CFA®, President of Motley Fool Wealth Management, is out this month.
August
Check Beneficiary Designations
When life changes happen, it’s easy to forget some of the necessary paperwork. Double check your accounts to make sure your beneficiary designations are up to date, including your life insurance, 401(k) accounts, and IRAs.
Review Your Estate Plan
If you have wills, trusts, or powers of attorney set up, review them to be sure they’re current and reflect your wishes. It’s easy to lose sight of these once they’re set up, and changes to your life and circumstances may require updates.
If you don’t have a will or powers of attorney set up, consider contacting a lawyer to have them drawn up. They don’t have to be complicated or expensive, but having them in place can make crises less onerous for you and for your loved ones. And that’s priceless.
September
Pay the Fourth Set of Your Estimated Taxes
If your payroll withholdings aren’t sufficient to cover your tax payments, send your estimated payment to the IRS for money earned between June 1st and August 31st.
Are You Ready? It's National Preparedness Month
While the designation of National Preparedness Month was conceived as physical preparedness for emergencies, there are also plenty of ways to consider your financial preparedness as well, such as:
- Set aside 3–6 months of cash needs in an emergency fund. It’s important for your emergency fund to be fully liquid and available to you at a moment’s notice. Have you considered Fool Wealth’s high-yield cash savings partner, Flourish? Fool Wealth clients can sign up for an account right from your dashboard.
- Review your insurance coverage for death and disability. Oftentimes, folks sign up for this coverage through their employer, and employers may offer some base level of coverage as an employee benefit. One pro tip is to make sure that any disability coverage is paid with after-tax dollars — this will ensure that in the unfortunate event that you have to use your insurance, the benefits will be paid to you tax-free.
- Review your beneficiary designations on retirement accounts, adding TOD beneficiary designations on your bank and brokerage accounts, or adding a Trusted Contact to your brokerage account. By setting an appropriate beneficiary, your heirs will bypass the probate process and have access to funds quickly, and a Trusted Contact ensures that if you’re out of reach for some reason, any issues with your brokerage account can be addressed.
Review Your Wealth Goals
You’re two-thirds of the way through the year, and it’s a good time to check in on your progress towards the wealth goals you identified in January. Is your plan working? Do you need to change how you’re going about achieving your goals? Do the goals themselves need to change?
We set goals to help us build the life we want, and sometimes circumstances change. It’s always okay to update your goals to match what’s happening now.
October
Plan for Medicare Open Enrollment
It’s about to be open enrollment season, that window of time when you’re able to make changes to your Medicare benefits, including joining, switching, or dropping a Medicare Advantage plan, and joining or dropping a Medicare drug plan if you’re in Original Medicare. Make sure your plan is working for you.
It's RMD Season!
If you’ve reached the milestone age of 73 or better, the federal government is very interested in your pre-tax retirement savings accounts, such as 401(k)s, 403(b)s, TSPs, and IRAs. Specifically, you’re required to withdraw (and pay taxes on) amounts accumulated in pre-tax accounts.
The rules can be tricky to navigate, particularly if your spouse is much younger than you, or if you’ve inherited an IRA. The good news is that a Wealth Advisor can help you navigate this maze. The deadline for taking your RMD is typically December 31st, unless it’s your inaugural distribution, in which you have until April 1st of the following year. We think it’s better to get this off your to-do list early rather than pushing it to the deadline, since the government imposes penalties for being late, and the end of the year is hectic enough on its own.
Read Your Fourth Quarterly Strategy Writeup (Fool Wealth Clients)
We believe in transparency. To that end, our Portfolio Managers review all of our investing strategies every quarter to ensure that you understand what we’re investing in and why — and how we’ve performed. Our most recent quarterly writeup, including a letter from Nick Crow, CFA®, President of Motley Fool Wealth Management, is out this month.
November
Plan for Employer Open Enrollment
It’s about to be open enrollment season, that window of time when you’re eligible to make changes to your employment benefits for next year, including signing up for a health insurance plan, funding FSAs and HSAs, and signing up for additional life and disability benefits. While you can’t predict what issues might arise in 2024, maximizing your benefits can help you save more for retirement.
Consider enrolling in a Health Savings Account if your employer offers one, because it could make a difference in your long-term wealth plan. An HSA is an investment account in your name that is earmarked for health/medical expenses. These have a triple tax benefit: the contributions are tax deductible, the growth in the account is tax-free, and qualified distributions are also tax-free. The annual contribution limits for HSAs are $4,150 for the individual and $8,300 for family coverage. HSAs are most beneficial for folks without chronic conditions who can afford to pay for health care needs mostly out-of pocket.
Consider Tax-Loss Harvesting
If the taxes you’re likely to pay on your realized capital gains this year are significant, you might consider selling other investments at a loss to counterbalance those gains with realized losses. This strategy is most useful when you’re in a higher tax bracket, but be careful not to run afoul of the wash sale rule: if you buy the same or substantially similar security within 30 days, the IRA will disallow that loss.
December
Plan for IRMAA Premiums
In January, the income-related monthly adjustment amount (IRMAA) on Medicare Parts B and D will update based on your reported income. Here’s the catch: it’s based on your reported income from two years ago. If this applies to you, it will be listed in your Social Security Benefit Rate Change Notice. The difference between the lowest and highest Medicare Part B premiums is $419.30 per person per month, for an annual total of more than $10,000 for a retired couple.
Estimate Your Investment Income
Tax time is coming, and investment income can be the difference between that sweet refund and the hefty check you write to the IRS. While circumstances can still change between now and the end of the year, estimate your realized gains and losses so you can be prepared for any taxes you’ll need to pay. You can also review your investment statements for your year-to-date earnings for interest and dividends.
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