1. Freeze Your Credit

If you temporarily unfreezed your credit for a loan or new credit card last year, be sure to re-freeze it now. Freezing your credit is an effective way to protect against identity theft and unauthorized access to your financial accounts.

2. Update Your Home Inventory

Take a few moments to review and update your home inventory, whether you keep it in an app, a spreadsheet, or through photos on your phone. Removing items you no longer own and adding new purchases will ensure your inventory is accurate and ready for insurance purposes if needed.

3. Scrutinize Your Credit Report

Visit annualcreditreport.com to get your free credit reports from the three bureaus: Experian, TransUnion, and Equifax. Verify that the information is accurate and that all your credit cards, store accounts, and loans are properly listed. This will help catch any errors or fraudulent activity. If you notice discrepancies, file a dispute with the relevant credit bureau.

4. Verify Your Social Security Earnings

Your Social Security benefits are based on your earnings record, so it’s crucial to ensure your reported income is correct. Log into myssa.gov to view and confirm your earnings history. If you notice any errors, you can easily request a correction online. For 2024, the maximum taxable earnings subject to Social Security tax is $168,600. Double-checking this annually ensures your record stays accurate for future benefit calculations.

5. Review Your Estate Planning Documents

Take some time to review the key documents in your estate plan, such as your will, power of attorney, and property deeds. Whether they’re stored in physical files or securely stored digitally, it’s important to confirm they’re updated and easy to access should you need them.

6. Revise Your Annual Budget

Look over your budget from the previous year and make adjustments for 2024. Tools like Tiller, Monarch, or YNAB can help you track your spending and ensure you stay within your financial goals. While inflation can increase certain costs, staying aware of your spending is the key to preventing your expenses from creeping up.

7. Prepare for Tax Season

Organize your tax documents in one central location—whether it’s a folder, box, or basket—to avoid scrambling when it’s time to file. You’ll receive a mix of mailed forms, emailed notices, and online documents, so keeping everything in one place will save you time and hassle when tax season arrives.

By checking these key items annually, you’ll stay on top of your financial health and be ready for whatever the year brings. Starting the year with these updates will give you peace of mind, knowing your finances are secure and organized.

The post Start the Year Strong: Get Your Financials in Shape for 2025 appeared first on MainStreet Financial Planning.

1. Maximize Your Retirement Contributions:

Enhancing your retirement savings not only secures your future but also offers immediate tax benefits. For 2024, the IRS has increased contribution limits:

– 401(k), 403(b), and most 457 plans: You can contribute up to $23,000. If you’re 50 or older, you can make an additional catch-up contribution of $7,500, bringing the total to $30,500.

– Traditional and Roth IRAs: The contribution limit is $7,000, with an extra $1,000 catch-up contribution for those 50 and above, totaling $8,000.

While IRA contributions for 2024 can be made until April 15, 2025, contributing before year-end allows you to benefit from tax-deferred growth sooner.

2. Harvest Tax Losses

If you have investments that have declined in value, consider selling them to offset capital gains from other investments—a strategy known as tax-loss harvesting. You can use up to $3,000 of net capital losses to offset ordinary income, with any excess carried forward to future years. Consult with a tax professional to navigate the complexities and avoid wash-sale rules.

3. Prepay Deductible Expenses

If your itemized deductions are close to the standard deduction thresholds—$14,600 for single filers, $29,200 for married filing jointly, and $21,900 for heads of household in 2024—prepaying certain expenses can help you exceed the standard deduction and maximize your tax benefits. Consider:

   – Mortgage Interest: Making an extra mortgage payment to increase deductible interest.

   – Medical Expenses: Scheduling and paying for medical procedures or expenses before year-end, especially if they exceed 7.5% of your adjusted gross income.

 – Property Taxes: Paying property taxes due in early 2025 before December 31, 2024, keeping in mind the $10,000 cap on state and local tax deductions.

– Tuition Payments: Prepaying college tuition for the upcoming semester may qualify you for education credits, such as the American Opportunity Tax Credit, worth up to $2,500 per eligible student. Be aware of income phase-out ranges for these credits.

4. Bundle Charitable Contributions

If your charitable donations don’t typically exceed the standard deduction, consider “bunching” multiple years’ worth of contributions into one year to maximize your itemized deductions. Establishing a donor-advised fund allows you to make a large charitable contribution in one year, receive the tax deduction, and distribute funds to charities over time. This strategy is particularly effective if you have appreciated securities, as donating them can help you avoid capital gains taxes.

5. Contribute to a 529 College Savings Plan

Contributions to a 529 plan grow tax-free, and withdrawals for qualified education expenses are also tax-free. While there’s no federal tax deduction for contributions, many states offer tax benefits. For example, California does not provide a state tax deduction for 529 contributions, but the tax-free growth and withdrawals still offer significant benefits. Check your state’s specific rules to understand the potential tax advantages.

By implementing these strategies before December 31, you can optimize your tax situation and set a strong financial foundation for the upcoming year. Always consult with a tax professional, (we happy to help you as well) to tailor these strategies to your personal circumstances and ensure compliance with current tax laws.

The post Save on Taxes with These 5 Year-End Financial Tips appeared first on MainStreet Financial Planning.

What is an HSA?

A Health Savings Account (HSA) is a special type of savings account that allows individuals with a high-deductible health plan (HDHP) to save money pre-tax for future medical expenses. The funds can be used for qualifying medical costs like doctor visits, prescription medications, dental care, and vision services.

The real beauty of HSAs lies in their triple tax advantage:

1. Tax-deductible contributions: The money you contribute to your HSA is pre-tax, which lowers your taxable income.
2. Tax-free growth: Any interest or investment earnings grow tax-free.
3. Tax-free withdrawals: When used for qualified medical expenses, withdrawals are also tax-free.

How Does an HSA Work?

To open an HSA, you must be enrolled in a high-deductible health plan (HDHP). Contributions to the HSA can be made by both individuals and employers. In 2024, the annual contribution limits are:

– $4,150 for individuals.

– $8,300 for families.

– Those over 55 can make an additional $1,000 catch-up contribution.

One great feature of HSAs is that the funds roll over year after year, unlike Flexible Spending Accounts (FSAs) where unused funds can expire at the end of the year. This makes HSAs a great tool for both short-term healthcare costs and long-term financial planning.

How to Invest Your HSA

Beyond just saving for medical expenses, HSAs offer investment opportunities. Once you’ve built up enough savings, many providers allow you to invest your balance in mutual funds, ETFs, and stocks—much like you would with a retirement account. This allows the funds to grow over time, providing an additional cushion for future medical costs, especially during retirement.

For example, if you can cover your medical expenses out of pocket now, you can let your HSA balance grow tax-free for decades. After age 65, you can even withdraw the funds for non-medical expenses without penalty, although the funds will be subject to regular income tax.

Top HSA Providers

Choosing the right HSA provider is key to maximizing your account’s benefits. Here are three top providers to consider:

1. Fidelity – Best for Investment Options

Fidelity offers a wide range of investment opportunities with no account fees and no minimum balance required to start investing. It’s ideal for those who want to actively grow their HSA funds.

2. Lively – Best for Low Fees

Lively is known for its fee-free structure and flexibility. It partners with Schwab platform for investment options, offering a simple yet robust platform for HSA management.

3. HealthEquity – Best for Automated Investment Help

HealthEquity provides robo-advisor options for those who prefer a hands-off approach to investing their HAS, Vanguard funds as an option. It’s also a great option for employer-sponsored HSAs, offering seamless integration with payroll systems.

What Can You Use an HSA For?

HSAs can be used for a wide range of qualified medical expenses, such as:

– Doctor visits and co-pays.

– Prescription medications.

– Dental and vision care.

– Acupuncture and physical therapy.

After age 65, HSAs become even more flexible, allowing you to use the funds for non-medical expenses without facing a penalty. However, non-medical withdrawals will be subject to regular income tax, similar to traditional IRA withdrawals.

HSAs as a Long-Term Planning Tool

While HSAs are great for covering immediate medical expenses, they also serve as a powerful tool for retirement planning. Medical expenses often rise in retirement, and having a dedicated account that grows tax-free can help ease the burden. Many people use their HSA as a supplemental retirement fund, tapping into it during their golden years for healthcare costs, which are tax-free.

Even if you don’t use all the funds for medical purposes, HSAs remain one of the most tax-advantaged savings accounts available, making them an excellent part of any long-term financial strategy.

Health Savings Accounts offer a unique opportunity to save for medical expenses while also benefiting from long-term tax advantages. Whether you’re looking to reduce your current healthcare costs or build a nest egg for future needs, an HSA can be a key component of your financial strategy.

Take action today:

Look into opening an HSA if you haven’t already, and consider maximizing your contributions to benefit from this powerful financial tool. For those with existing HSAs, it may be time to start thinking about how you can invest those funds for even greater growth.

The post Unlocking the Power of Health Savings Accounts (HSAs) appeared first on MainStreet Financial Planning.

1. Healthcare
Open enrollment is an excellent time to reassess your healthcare needs for the upcoming year. Here are a few items to review for your healthcare benefits:

Consider if you need to change the type of healthcare plan you will have for the upcoming year. If you have an upcoming surgery or a baby on the way, a lower-deductible health plan might be beneficial. Conversely, if you are generally healthy and don’t anticipate significant medical needs, a high-deductible health plan could be more cost-effective.

If you do choose the HDHP, you may also have the option to open a Health Savings Account (HSA) where you can contribute pretax dollars to an investment account that can grow and be withdrawn tax-free to be used for eligible healthcare expenses over the rest of your life.

Does your employer offer a Flexible Spending Account?  If so, you have the benefit of setting aside a specific amount from each paycheck, pretax, to go into an account to be used for various healthcare expenses for that year. The trick with an FSA is that these dollars don’t roll over every year so you may need to adjust how much you contribute each year based on what you expect to spend on healthcare-related expenses for the upcoming year.

2. Disability Insurance
Check whether you have disability insurance through your employer. Some employers automatically provide this benefit, covering the premium and offering about 60-65% of your income if you need it. If your employer offers you the option to purchase additional coverage, remember that paying the premium yourself means your disability income will be tax-free. If your employer pays the premium, the income will be taxed, which can affect your take-home amount. Understanding your coverage and tax implications is crucial to ensuring you have adequate protection. Use open enrollment as a time to confirm you have disability insurance, review how much coverage you have, and consider whether you might need additional coverage through a private policy if what you have through work would not be sufficient for your family.

3. Life Insurance
Review your life insurance options during open enrollment. Employers often provide a base amount of life insurance, typically one to two times your salary. You may also have the option to purchase additional coverage for yourself or your spouse. Group policies offered through employers are usually more cost-effective, making this an opportune time to secure adequate life insurance, especially after significant life changes like marriage, home purchase, or childbirth.

4. Legal Benefits
I’ve seen a lot more employers starting to offer legal services to their employees. This could be useful to you if you need estate planning done, which could be at a free or reduced cost through your benefits. There are also legal plans you can sign up for that allow you a set number of hours of legal counsel as well. Be sure to check your full benefits package to see if this is available to you!

I hope this helps you in reviewing your employer benefits during this open enrollment season and if you have questions about whether you have the right coverages for you, reach out to us at MainStreetplanning.com and we would be happy to review your employee benefits with you as you decide what benefits are right for you this year.

The post 4 Things to Review During Open Enrollment appeared first on MainStreet Financial Planning.

At MainStreet Financial Planning, every member of our dedicated team is proudly affiliated with the Garrett Planning Network (GPN). This affiliation goes beyond a mere association; it signifies a commitment to providing exceptional service and embracing a unique model of financial planning. Our approach aligns with the five defining characteristics upheld by the Garrett Planning Network that set us apart in the realm of financial planning.

Here is what makes us different:

1. Hourly, Fee-Only Service:

We operate on an hourly or, flat, fee-only basis, ensuring transparency and alignment of interests with our clients. Importantly, we do not accept sales commissions or any compensation beyond what is directly agreed upon with our clients. Clients pay only for the time your advisor actively works with you.

2. No Minimums, Maximum Accessibility:

Unlike traditional financial advisors, being a Garrett Advisor means that we have no income or investment account minimums for hourly engagements. This eliminates barriers, making our services accessible to individuals across different income brackets.

3. No Product Sales, Pure Expertise:

This is probably the most distinctive part of being a Garrett Planning Network advisor. We, as Garrett Advisors, distinguish ourselves by not selling financial products. Instead, we offer our time and expertise to guide clients through their financial journey. This commitment to objectivity ensures that the advice provided is solely focused on the client’s best interests.

4. Tailored Recommendations:

While not selling products, we do offer specific recommendations and opinions on various products and services that may be suitable for a client’s situation. Additionally, we can guide clients on where to obtain these products or services. If requested, we can also assist with plan implementation so whether it is rebalancing your employer’s 401(k) or giving a recommendation for how to invest your ongoing IRA or brokerage account contributions so that they align with your risk tolerance and time horizon, we can help regardless of whether they are held at Schwab, Vanguard, Fidelity, Betterment, etc.

5. Accessible Financial Guidance for All:

This is my favorite quality of being a Garrett Planning Network advisor – with fees structured as flat or on an hourly basis, MainStreet provides accessible options for individuals at every stage of their financial journey. Whether you’re a beginner with a quick question, a middle-income earner seeking ongoing financial assessment, or a do-it-yourself enthusiast in need of direction, Garrett Advisors cater to diverse financial needs. Our team has a wealth (pun intended) of knowledge ranging from:

• Debt payoff plans
• Experience with government employees, including both military and civilian
• Evaluating equity compensation
• Helping small business owners
• Working with individuals who are widowed or divorced.
• Planning for college
• Taking a gap year
• Relocating to another state or country
• Retirement income planning
• And so much more

In embracing the Garrett Planning Network model, clients gain not just financial advice, but a partnership built on trust, transparency, and a commitment to their financial well-being. If you’re intrigued by this innovative approach to financial planning, feel free to reach out with any questions. I say this with the most humility one can communicate in a brief article that our entire team at MainStreet loves what we do, and we are here to guide you every step of the way.

The post Unlocking Accessible Financial Advice The Garrett Planning Network Advantage appeared first on MainStreet Financial Planning.

I suggest you make time early in the open enrollment period so you can dedicate ample time to making the best choices.  You may need/want to gather more information before making a benefit selection, so getting started early will give you time to do that.  Use this guide as you navigate your open enrollment…I hope it helps you take a fresh look at your benefits!

Health Insurance:  Re-evaluate your needs for the upcoming year and pick the plan that is best.

• If you are generally healthy and expect healthcare expenses to be minimal, then choose a High Deductible Plan they have the lowest premiums but the highest deductibles. If, you end up having unexpected medical costs then you will have out-of-pocket costs…but that is why you have an emergency fund!
• If you have health issues, take regular medications, are planning to have a baby or a planned surgery in the coming year, then choosing a plan with lower out-of-pocket costs would be the best strategy.

Spending Accounts:  Contributions are with pre-tax wages and if you use the money on eligible expenses…you never pay taxes on that money!

Healthcare FSA – Maximum contribution limit for 2024 is $3,200.

• Use it or lose it (recently you may be able to rollover a small amount into the next calendar year- check with your employer).
• Only contribute what you plan to spend on eligible healthcare expenses in the coming year.

Dependent Care FSA- Maximum contribution limit for 2024 is $5,000 (single and married filing jointly taxpayers); $2,500 (married filing separately taxpayers).

• Use it or lose it!
• Can be used to pay for childcare expenses: daycare, preschool, summer camps, and before/after-school programs.
• Can also be used for adult care expenses for any adult you can claim as a dependent on your tax return that is physically or mentally unable to care for him/herself.

Health Savings Account (HSA) – Maximum contribution limit for 2024 is $4,150 for an individual and $8,300 for a family.

• You have to have a high deductible health care plan to be eligible to contribute.
• Unused funds will rollover, so you can choose to invest the money you have in your HSA and use the funds later for medical expenses.
• If you are 55 and older you can contribute an extra $1,000.

Disability Insurance– Don’t miss this chance to protect your ability to continue to earn income in the event you are unable to work due to injury, illness, or maternity leave.

• Short Term Disability coverage is usually paid for by your employer and would provide a percentage of income to you in the event of an injury or illness that prevents you from going to work for a short period of time.
• Long Term Disability is often paid for by your employer and kicks in after short term disability coverage ends. It will provide income replacement of usually 60-70%.
• If you have the option to increase your coverage through your employer, we highly recommend it. Premiums can be lower than getting a private disability policy.
• There may be an elimination period before disability payment begins, so have an emergency fund you can access.
• Click here to watch a short video all about Disability Insurance.

Life Insurance:  Re-evaluate your life insurance needs and decide if your employer group life insurance options are best for you.

• Pros of group life insurance: easy to get (no medical exam)
• Cons of group life insurance: usually not portable and premiums will increase frequently.
• Explore a private life insurance policy and compare rates with your work provided group coverage.
• Figure out how much life insurance you need. You generally need life insurance if you have dependents (spouse, kids) relying on your income for housing and education costs.
• AD&D insurance is cheap, but it rarely pays out due to all the exclusions. It is usually best to have life insurance instead of AD&D.
• Click here to access a bunch of articles to learn more about life insurance!

If you need help understanding your employee benefits or making a benefit selection, we are here for you!

The post OPEN ENROLLMENT: A WINDOW OF OPPORTUNITY! appeared first on MainStreet Financial Planning.

Here’s a chart I made up from information on the healthcare.gov website. When looking for health insurance in the Marketplace be sure to include all household income for anyone on the tax return or might file a tax return (a child, for example).

Once you have Marketplace insurance, don’t forget you need to report changes as soon as they become applicable. If you don’t report changes you can miss out on more savings or must pay some or all the subsidy back on your next tax return.

If this is your first time looking for health insurance in the Marketplace here’s what we recommend:

1. Go to HealthCare.gov
2. Click on Get Coverage
3. Pick your current state residence in the drop-down menu
4. Click on the “Visit Your State” button
5. Full speed ahead or click on the “Need Assistance” button
6. You can also access local brokers for assistance too. Click on that button.

There are many ways to lower your AGI and MAGI. The easiest and most beneficial are retirement account contributions in your 401k/403b, SEP or similar income reduction before income taxes. At this time of year, you must act fast to have any effect on this or next year’s income.

If you do enroll in a Marketplace plan for the first time, be sure to look over IRS form 8962. You can find instructions at https://www.irs.gov/instructions/i8962.  If you’re already enrolled, look for the 1095-A statement. You should also have received two re-enrollment letters. One comes from your insurance company and one from the Marketplace.

Health insurance is a tool to reduce your financial risk of owing hospitals and health care practitioners large amounts of money. It’s costly and complicated, but in your best interest to stay informed.

Look for good, reliable information from HealthCare.gov and AARP.org Both do a good job supplying information, alternatives, and help you make cost-effective decisions regarding health insurance in the ACA Marketplace.

The post ACA Wants MAGI, Not AGI appeared first on MainStreet Financial Planning.

Panic sets in, followed by frustration. Now what can you do?

Well, you have some options, but they could be limited:

• Native American, you’re in. Open all year long.
• Eligible for Medicaid or CHIP, you’re in too. Open all year long.
• Apply for a short-term health plan for up to a year, maybe even 36 months.
• Become eligible with a “qualifying event” and enjoy a “Special Enrollment Period.” Moving used to qualify, but not anymore unless you’re on a plan already.

So now you’re thinking you’ll just get one of those short-term plans. Their terms and conditions are different from normal ACA qualified plans that you obtain through employer or individual plans bought on an exchange. By the way, six states which now includes Hawaii now don’t offer short-term plans.

Short-term plans do offer some coverage that approaches normal health plans but there are downsides:

• No premium subsidies like those available for ACA plans.
• Lifetime limits like the old days, anywhere from $50,000 to $2million.
• Loss of a short-term policy is not a qualifying event to get you back on an ACA plan.
• Does not cover pre-existing conditions.
• Doesn’t cover maternity, mental health or preventative care like check-ups.
• Doesn’t have prescription benefits.
• Doesn’t qualify for minimum essential coverage so when you go back on an ACA plan there could be a penalty.

Depressed? Don’t be. There are some positives to short-term plans and include:

• Simple enrollment application, usually online.
• Lower premiums in most cases (you get what you pay for).
• Limited medical questions and underwriting.
• Don’t have to follow ACA rules.
• Better than being uninsured, especially going into the emergency room where the first question is “what is your medical coverage?”

So, we hope you will meet employer or individual ACA open enrollment deadlines this season. But if not, you do have some limited options using a short-term plan.

The post Health Insurance Open Enrollment Deadlines appeared first on MainStreet Financial Planning.

1. Sticking with your current plan? Pay close attention to the coverage details summarized in the renewal info you got from your insurer/exchange. And make sure your preferred doctors are still “in your network.” Provider networks change frequently as physician groups join together and health systems re-contract with insurers.
2. More than one in four people experience a disability for 90 days or more before they reach age 67. Don’t overlook your short-term disability and long-term disability coverage. Common health issues like diabetes, heart attacks, cancer, back injuries lead to the most disability claims. And workers comp only replaces a portion of your income if you’re disabled because of a work-related injury.
3. Are there health and wellness benefits you should be taking advantage of? Keep an eye out for health coaching, weight loss programs, health assessments, etc. There’s often a financial incentive to participate!
4. Re-evaluate your need for life insurance. Most of us know the importance of protecting income when you have dependents that are relying on you. But maybe you’re child-free and you own a home with your spouse or partner. If something happened to you would they be able to cover the mortgage themselves? Or would they be forced to move? Alternatively, if you have a co-signer on your private student loans, that person is responsible for paying off your loan even after you’ve passed.
5. Try to save an additional 2% (or 3% or 4%) to your retirement plan next year. The 401k/403b/457 contribution limit will be $19,000 in 2019. Same $6,000 catch-up contribution if you are age 50 or over. Remember, an employer match is not included in these limits, so keep squeezing that budget!
6. Pull out the data. How much did you spend in the past year on premiums, out-of-pocket expenses, regular prescriptions? How many doctors’ visits did you have? Did money left in your FSA account go to waste? Any life changes this year that impact your health insurance selection (addition to the family or new medical condition)?
7. Use all the tools. If you have an employer sponsored plan, many health insurers offer comparison tools that you can customize to determine the best plan to fit your needs. And if you have a plan on the individual market, check out ehealthinsurance.com or gohealth.com to do some comparison shopping.
8. Now is the time to do a dive deep into your benefits selection options. Your next opportunity won’t be until November 2019 if you have a plan in the individual market (on and off-exchange). Unless of course, you experience a life event that qualifies you for a special enrollment period: new baby, aging out of a parent’s plan, divorce or marriage, lost your job, etc.

Good luck, and set a goal to have your selections made by December 1st! As far as last-minute scrambling with holiday presents – that one’s on you.

The post 2018 Open Enrollment Tips appeared first on MainStreet Financial Planning.

In this episode of the Money Date, Anna reviews Open Enrollment Season and how to make good choices for the year ahead. She’ll review different insurance options, why it’s important to take the time to review your employer’s benefit options, and discuss options on the open market, including Medicare choices.

The post Making Good Choices on Your Benefits appeared first on MainStreet Financial Planning.