As most of us were celebrating the holiday season, a significant piece of legislation passed that, in one way or another, impacted every person reading this. We’ve tried to boil down the 100+ pages to these highlights:

Required Minimum Distributions: The age at which required minimum distributions (RMDs) begin was pushed back to age 73 for individuals born between 1951-1959 and age 75 for those born after 1960, allowing for additional tax deferrals for many.

529 Plan Changes: Beginning in 2024, some individuals can move money from a 529 plan directly to a Roth IRA. This can be incredibly impactful if you set up a 529 years ago and the beneficiary finished college (or didn’t attend college) without completely exhausting the funds.

Retirement Plan Changes: Beginning in 2025, catch-up contributions will be indexed to inflation, ultimately allowing for more significant retirement vehicle savings. Additionally, matching contributions from employers can now be made to Roth accounts.                                                                                    

Student Loan Debt: Starting in 2024, employers can “match” employee student loan payments by contributing to a retirement account for the employee.

Please get in touch with us if you’d like to discuss any of the above information and see how it may impact your specific situation.

Hill Investment Group is a registered investment adviser. Registration of an Investment Advisor does not imply any level of skill or training. This information is educational and does not intend to make an offer for the sale of any specific securities, investments, or strategies. Investments involve risk and, past performance is not indicative of future performance. Consult with a qualified financial adviser before implementing any investment strategy.

Last month, a few team members enjoyed dinner and a toast in honor of our Founder, Rick Hill, alongside his wife Lynn, to celebrate Rick’s milestone 80th birthday.

Friends and clients love knowing that Rick is part of the team. If you want to know why at 80, Rick is still helping people take the long view, Rick says, “I continue to be stimulated with my work duties and communicating with clients and prospects. I love the opportunity to continue interacting with the staff, whom I respect and enjoy being around. I find these relationships rewarding and energizing.”

This is the latest in our series of introductory “101” financial guides. Each guide reveals a set of wise actions as well as a set of behaviors to avoid. The goal? Help you make smart choices at every turn in your financial road trip. Your financial success can be exponentially enhanced when you make wise financial decisions repeatedly over a long period. This month’s focus is Saving. You will increase your chances of financial security if you start saving early, contribute regularly, and live within your means. It all starts with having a savings plan. 

Compounding Wisdom:  Saving

 Compound Wisdom Actions

• Set an Annual Savings Target – strive to save or invest at least 20% of your income each year.
• Be Intentional – your savings plan should establish priorities among retirement, education for kids, large purchases, and investments.
• Act Now – too often, we procrastinate due to loans or large purchases but remember that your most valuable dollar is the last one saved, and no amount is too small.
• Auto “Pay Yourself First” – enforce discipline using automated transfers from checking into savings and investments accounts.
• Prepare for Emergencies – don’t invest until you have sufficient liquid savings to pay for 3-6 months of living expenses.
• Plan for Large Purchases – define your next large purchase (what, when, and how much) and then save methodically each month.
• Keep Life Simple –avoid buying things that complicate your life and add unnecessary costs; more can be less.
• Save With Purpose – each dollar should be saved or invested with a purpose in mind so you can apply appropriate risk.
• Use Credit Wisely – remember that using credit means spending money today that you may not have yet earned.
• Zero the Balance – pay off all credit card balances each month; making a mid-month partial payment will likely raise your credit score.

Actions to Avoid:

• I Can’t Resist – Purchasing large items without a plan.
• C’est la vie – Living a lifestyle that prevents you from saving/investing 20% of your income.
• I’ll Start Next Year – Delaying savings due to lack of discipline or debt payments.
• That’s All I Had to Do – Only paying the minimums on credit card bills or other loans.
• Robbing Peter to Pay Paul – Using your checking account or credit card to fund emergencies or tapping your retirement accounts.
• But It’s an Emergency – Using your emergency fund for non-emergency spending.
• Scared Money Don’t Make Money – Don’t be risk averse when you are young; you are a time billionaire, so leverage it.

Feel free to pass this along if you know someone who might benefit from the guidance and look for more from me in this monthly series.

I lead our Hillfolio-level client service and planning efforts; learn more about me here and reach out if I can help you put the magic of compounding on your side.