End the Year Right: 6 Financial Tips for Retirees

The end of the year is a perfect time to get your financial house in order. You can find ways to save on taxes, discuss money issues with your family and make plans for 2018.

How to begin? We generally recommend these simple tips:

1. Look for ways to reduce your 2018 income taxes.

Take action before the end of the year to save on taxes. You could consider:

  • Contributing the maximum amount to all of your retirement plan programs. Why? The government gives you a tax deduction for making contributions to certain qualified retirement plan programs — meaning those funded with pretax dollars, such as your 401(k), 401(b) and traditional IRAs (excluding contributions to a Roth IRA). No matter what tax bracket you’re in, your money can grow there without being taxed until you pull it out.
  • Tax bracket management. Is there a gap between the bracket you’re in right now (your amount of taxable income) and the next tax bracket? You may be able to use that gap to your advantage, perhaps by selling and realizing a capital gain, or by converting money in a traditional IRA to a Roth IRA. We suggest talking to a financial professional about this valuable opportunity.
  • Timing and/or bunching deductions. If you think your income may change in 2018, go over your deductions and see if you can move them into whichever year will do you the most good. You may also be able to bunch certain expenses into one year, which could push you over a threshold that gives you a tax deduction you wouldn’t have gotten otherwise.
  • Dumping losing stocks. Taking losses can help with your taxes.

2. Take required minimum distributions.

If you are age 70½ or older and don’t take the required minimum distributions on IRAs, you’ll be penalized. It’s no small matter — the penalty is 50% of what you should have withdrawn, and then that amount is taxed. For all people except those of whom are due for their first RMD (who can wait until the following April), you need to take care of it by the Dec. 31 deadline.

3. Give.

Donating to charities can reduce your tax bill. Besides giving to charities, you can also currently give $14,000 to as many individuals as you’d like without incurring a gift tax or affecting the unified credit. A husband and wife can each currently make $14,000 gifts. In 2018, the gift tax exclusion amount goes up to $15,000.

This article originally appeared on Kiplinger.com  Read more at https://www.kiplinger.com/article/retirement/T055-C032-S014-end-the-year-right-6-financial-tips-for-retirees.html#TTmbAXK7Y3LqEpIy.99