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5 End-of-Year Financial To-Dos

December 06, 2016

Growing Your Wealth


The month of December often whizzes by in a flurry of gift buying, cookie baking and snow shoveling. But the final month of the year is also a good time to get your finances in order and prepare for the New Year. With that in mind, here's a look at end-of-year financial tasks to tackle:

Task 1: Revisit Your Withholding

If you’ve gotten married, divorced, or had kids in 2016, then you probably need to update your withholding with your employer’s human resources department. Often times a simple adjustment to your W4 will let you keep more of your hard-earned money during the year (when you need it) instead of getting a large tax return in April.

Task 2: Review Your Beneficiaries

You can check your beneficiaries on your retirement accounts or insurance policies at any time, but it’s a good idea to do this at least annually. Remember, your listed Beneficiary on a retirement plan trumps your will (unless you make your beneficiary your estate or trust). It’s easy to forget life’s changes when you are in the middle of one. Someone may have died or you may have gotten divorced. If you make this part of your year-end check list, it will be easier to remember.

Task 3: Know Your Checkpoints

So, are you saving enough for your retirement? That’s a very difficult question, because there are so many variables: market returns, asset allocations, even your health impacts your bottom line. However, it’s important to have a general idea of what you should have at a particular age. The balances on the chart below take into account your Social Security income, but do not reflect any pensions, rental income, or employment income. Of course, the more additional income you expect to receive in retirement, the more you can reduce your retirement nest egg.

Retirement Savings Checkpoint Table

How to use:

  • Go to the intersection of your current age and your closest household income (if married you can use your combined data and average age).
  • Multiply your household income by the checkpoint shown to get the total amount your household should have invested today, assuming you continue to save 5% going forward.
  • Example: For a 40-year-old with a household income of $100,000: $100,000 X 2.6 = $260,000

Task 4: Evaluate Your Deferral Rate (and increase it)

You have until you file your tax return in the spring to make a 2016 contribution to an individual retirement account (IRA), but 401(k) contributions are only deductible when made in the same calendar year. Otherwise, make plans to contribute the maximum amount for the New Year! The 2016/2017 contribution limit is $18,000 for employer retirement plan and $5,500 for IRAs (with an extra $1,000 catch-up contribution option for those ages 50 and older).

Gradually increasing your deferral rate 1% per year until you are contributing 15% of your income may be the easiest approach for securing your financial security without suffering a large change in lifestyle.

Increase Your Retirement Deferral Over Time

Based on $30,000 salary, 2% annual salary increase, 15% max deferral, and 6% annual rate of return.

Task 5: Take Your Minimum Required Distribution

The last task only applies to those individuals age 70+, but is an important one.
In the year in which you reach age 70 ½, you must take Required Minimum Distributions (RMDs) from your employer plan by April 1 of the following year. Subsequent years must be taken out by December 31 of that year. However, if you are still actively employed, at the time you reach 70 ½, you are not required to take a RMD. The penalty for failing to take your RMD is a 50% tax on what should have been withdrawn! So make sure if you're 70 ½ that you take the appropriate RMD for the year. Union Bank & Trust sends out an initial set of paperwork the year you turn 70½ on which you can direct ‘when’ and ‘how’ your RMD payment is made. Remember, your Required Minimum Distribution is calculated using your account balance as of January 1, regardless of market volatility.

Heed these suggestions to start 2017 on the right financial footing and secure your future retirement. Happy New Year and make it a great year!


(October 2016)

© 2016 M.A. Co. All rights reserved.

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Extremely insulted in the manner my first 403b withdrawal was planned. No office available? You made the appointment, brushed us off to who knows who, still no office available, oh let's shove them in the entrance to the bank,never mind discussing private finances in the banks entry. My idea, Chili's when any question arrives, close to whoever you brush off.,
comforble seating, semi-private.

Throughly disgusted,
Linda Ogren

This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.

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