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Where to Invest Your Retirement Savings in 2023

The cultivation of wealth necessitates both a plan and surplus capital, and a key consideration is the selection of a financial repository. The account you opt for impacts the potentially available investments, the taxation of your funds, and the amount you can save annually. Moreover, the most suitable account for your needs depends on your retirement objectives and available resources. To assist in determining the optimal location for your funds in 2023, here are a few straightforward principles to consider.   Prioritize your 401(k) if you are eligible for employer-matching contributions   Prioritizing the acquisition of your 401(k) match is crucial as it is a fleeting opportunity. Failing to take advantage of this offer before the end of the year will result in its loss. Therefore, to ensure that you can secure your match, strive to do so as soon as possible. Once this has been accomplished, you can evaluate whether you wish to continue saving in your 401(k) or pursue alternative options.   To determine the necessary contribution to qualify for the full match in 2023, consult your company’s HR department. Remember that this amount may differ from what was required in 2022 due to potential salary increases or modifications to the matching formula by your employer.     Consider Opening an Individual Retirement Account (IRA)   An IRA could be a good option for your savings goals if your company does not provide a 401(k) or if your 401(k) does not allow employer-matching contributions. The option to have more influence over your investing decisions and costs is one of an IRA’s main benefits. Additionally, you are permitted to make contributions to an IRA provided that your yearly income is equal to or greater than the maximum annual contribution.   IRAs also offer the option to select the timing of paying taxes on your funds. Traditional IRAs provide a tax deduction in the present, but taxes on contributions and earnings must be paid in retirement. Alternatively, Roth IRAs allow for tax-free retirement withdrawals if taxes on contributions are paid in the year of contribution. Generally, Roth IRAs are more favorable if you anticipate being in the same or a higher tax bracket in retirement. However, it is vital to note that high-income earners may not be able to contribute directly to a Roth IRA.   For the year 2023, the maximum contribution limit for IRAs is $6,500. In addition, if you are 50 years or older, you may be eligible to make an additional catch-up contribution of up to $1,000. These limits have slightly increased from the previous year.   Think about Opening a Health Savings Account (HSA)   Health Savings Accounts (HSAs) can be helpful to retirement accounts, although not designed for this use. It’s crucial to remember that only people with high-deductible health insurance plans are eligible for these accounts. A deductible of at least $1,500 for a person or $3,000 for a family will be deemed a high-deductible plan as of 2023.   The maximum contribution limit for HSAs in 2023 is $3,850 for individual health insurance plans and $7,750 for family plans. All contributions to an HSA reduce your taxable income for the year and, if utilized for medical expenses at any age, are tax-free. While nonmedical withdrawals are also permitted, it is generally not advisable to do so before age 65, as a 20% early withdrawal penalty in addition to taxes will be levied.   If you decide to save in an HSA, ensure that you choose a provider that allows for the investment of funds to maximize earning potential through interest. HSAs can be established with numerous banks and brokers, but it is essential to research the fees associated with the account before committing. To facilitate the process, consider setting up automatic transfers to your HSA to eliminate the need for manual contributions.   Try to Pick More than One Option   You could always utilize more than one account if you’re deciding between a few of the ones listed above. You might begin with your 401(k) and move to your IRA after receiving your match. You may return to your 401(k) or start saving in an HSA once you reach that maximum. Consider all your alternatives carefully, then pick the ones that fit your retirement savings strategy. 
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Bio:
I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.

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Todd Carmack

Todd Carmack grew up in Dubuque, Iowa, where he learned the concepts of hard work and the value of a dollar. Todd spent years in Boy Scouts and achieved the honor of Eagle Scout. Todd graduated from Iowa State University, moved to Chicago, spent a few years managing restaurants, and started working in financial services and insurance, helping families prepare for the high cost of college for their children. After spending years in the insurance industry, Todd moved to Arizona and started working with Federal Employees, offing education and options on their benefits. Becoming a Financial Advisor / Fiduciary can help people properly plan for the future. Todd also enjoys cooking and traveling in his free time.

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