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The new year is an excellent time to review your finances to see if you’re on track to reach your retirement savings goals. If you’re considering retirement this year, here’s a checklist of important steps that can help you take stock of your financial circumstances and take action in 2023.

Step 1: Honestly Assess Your Financial Situation

When plotting your course forward, you need to know exactly where you stand. The end of the year is a good time to thoroughly assess the highs and lows of your financial situation. Examine both your saving and spending habits for the past year and estimate expenses and income for the year to come. Check your savings achievements: did you meet the savings goals you set for 2022? Are there any planned expenditures or potential windfalls on your horizon?

Make this a no-judgment audit. Once you have a solid grasp of your 2022 performance, you can plan precisely how you want to move forward.

Step 2: Create or Adjust Your Retirement Savings Plan

If you don’t yet have a retirement savings plan, 2023 is the year to start. You’ll want to examine which benefits Social Security makes available to you and when, as well as explore the many options for individual investments. You will also need to consider how health care costs, which have a tendency to rise with age, can impact your accumulated savings. Don’t hesitate to talk to a trusted financial advisor, and the Department of Labor has a worksheet to help you begin. These decisions will help you choose when you plan to retire, to so you can calculate how much you’ll need to have saved. 

If you have a plan in place and are satisfied with it overall, the new year is a time to make slight course corrections. If you attained your 2022 savings goals, consider stretching them a little. This is also your opportunity to allocate extra income should you have any (from a year-end bonus perhaps) to save for your future plans.

Step 3: Maximize Your 401(k) Contributions

One of the most important drivers of your retirement savings effort is your 401(k). The IRS made a cost-of-living increase to retirement contributions for 2023, to help people saving for retirement push back against inflation. With these increases, you’ll be able to contribute up to $22,500 to your 401(k) in the upcoming year.

There was also an increase in the catch-up provision, which lets workers over 50 give their retirement savings a little extra boost. In 2023, the 401(k) catch-up limit is an extra $7,500. Because 401(k)s are administered through your employer’s payroll, the deadline for contributions is December 31 each year.

If your employer matches your contributions to your 401(k), 2023 is definitely the year you should save as much as you can through your defined plan. Otherwise, you’re leaving free money behind. In 2023, you and your employer can contribute a combined maximum of $73,500 if you’re over 50 ($66,000 if you’re 49 years old or less).

Step 4: Maximize Your IRA Contributions, Too

IRA contribution limits also received an increase for 2023. When it comes to IRAs, you can contribute up to $6,500 in 2023. The IRA catch-up limit for contributors aged 50 and up remains at $1,000.

If you want to boost your 2022 savings, it’s not too late. You can contribute to your IRA up to April 18, 2023, the final deadline for filing your 2022 taxes.

Step 5: Rebalance Your Investment Portfolio

With an ongoing pandemic and volatile political tensions, economic effects ripple across our interconnected world. While the global supply chain continues to experience disruptions, energy and food prices continue to rise along with inflation. 

Worldwide economic uncertainty can affect your investment performance. The start of 2023 is a good time to analyze your asset allocation. Depending on your personal risk tolerance and how close you are to retiring, you might rebalance your portfolio for either growth or security.

Step 6: Consider a Health Savings Account

If you anticipate an increase in your medical costs or have a health care plan with high deductibles, consider opening a health savings account (HSA) in 2023. 

An HSA is a tax-deferred way to set aside money to pay for medical costs, including deductibles, copayments and qualified expenses. Not only does an HSA allow you to save for high or unanticipated health care costs, but it also gives you a tax advantage, because the money you (and your employer) put into your HSA is not counted as taxable income.

Step 7: Get Your Tax Information In Order

The deadline to file your 2022 taxes is April 18, 2023. 

That may seem distant, but the beginning of the year is a good time to get all your documents and receipts in order. Preparing early means you can work in stages, saving yourself time and stress later. The IRS has a fact sheet to help with specific steps to make the process easier.