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Before you slide into your summer vacation, a midyear savings checkup is a good idea. With six months left in the year, this is a great time to ensure you are on track to reach your savings goals, perform a little routine maintenance, and make any necessary adjustments to your savings plan.
To guarantee you are on track to reach your savings goals, examine each dedicated savings account and adjust your contribution amounts and strategy as necessary.
First, address your emergency fund and evaluate whether it will cover unexpected expenses related to your health, auto, or home. Next, consider long-term savings goals like an education fund for your children and your own retirement account. If your family has recently expanded, it may be time to allocate more funds towards educational expenses. Finally, think about discretionary savings goals like vacations and holiday gifts.
If you have a health savings account (HSA) or a Flexible Savings Account (FSA), be sure you are contributing enough to cover the deductible. It is a good idea to take a look back and average your expenses from the past few years. Combine that amount with any additional costs you anticipate this year and add a cushion for emergency procedures.
Your 401K or other retirement accounts should always be a top priority. Save as much as possible in this category, but at a minimum, contribute enough to qualify for matching from your employer. For 2019, the maximum 401k contribution amount is $19,000, a slight increase from last year. The catch-up contribution amount for those over age 50 remained unchanged at $6,000.
It is critical to select and maintain the type and amount of insurance necessary to protect your family should unforeseen circumstances arise. Emergency expenses can derail savings progress and put loved ones in financial distress.
Safeguard your family members with adequate life insurance to replace your lost income. If your family has recently expanded, it’s likely a good time to increase your coverage amount. However, if you are nearing retirement, you may consider reducing your life insurance amount and reallocating those funds in an HSA.
Verify you have named health care proxies and beneficiaries. Intended recipients may change due to a recent marriage, divorce, or if your children have come of age. Since these designations supersede directions in your will for your retirement account, appointing the right designee is essential.
That’s it! Knowing you are taking the right steps to protect your family and reach your savings goals will surely put your mind at ease during your summer vacation.