Take a look at your Flexible Spending Account balance and make sure that we do not leave money on the table. Image: CNokel/Shutterstock.com
By: John GrobeIt’s not too early to make or adjust our financial plans for the end of 2025 and the beginning of 2026. In fact, some might suggest that it’s almost too late to engage in 2025 planning. We certainly have a lot less time between now and December 31 than we did back on New Year’s Day, but there’s still time left to make a difference.
In searching for a quote to illustrate that it’s never too late if you start now, I came across tidbits from George Eliot (Mary Ann Evans) and Steppenwolf, but none of the quotes quite illustrated it from a financial perspective. The point we should grasp is that while, if we start saving today, we won’t have as much at the end of the year than we would have if we began on January 1st, we’ll have quite a bit more than if we never began at all.
Here are some things that we can do to improve our financial situation the remainder of this year and into next year.
• Ensure that we are contributing as much as we can to the Thrift Savings Plan. If we can’t max out in 2025, are we at least contributing enough to get the employer match? Plan how much we can contribute to the TSP next year (hint – more). Adjust our budget as needed to allow us to feed more to our TSP.
• If we are on target to max out our TSP, set up contributions to an Individual Retirement Arrangement. Consider making automatic contributions from our bank account.
• Take a look at our Flexible Spending Account balance and make sure that we do not leave money on the table. The Employee Benefits Research Institute estimates that workers left almost $4.5 trillion on the table in 2023. (Note: There tends to be a lot of confusion between Flexible SPENDING Accounts (FSA) and Health SAVINGS Accounts (HSA). While both allow for the use of pre-tax dollars to pay for qualified healthcare expenses, the HSA has benefits that far surpass this feature, writes Tyler Weerden in Is 2025 the Year to Open an HSA?)
• If we haven’t already, take a look at our withholding for federal and, if applicable, state income tax. If we were under-withheld and owed a penalty in 2024, we should make sure enough is withheld to avoid a penalty in 2025 and 2026.
• If we’re retired and of an age where we must take required distributions, make sure you take those distributions before year end. Don’t wait until the last minute to take your distributions, as there is a year-end rush at brokerage firms; start action to take your final distribution by December 15th.
One more item. If you’re concerned about job security, make sure you have enough in an emergency fund to cover three to six months of expenses. Keep your emergency fund where it can be easily accessed. There are still some deposit accounts that pay decent rates of return. On August 1st, I went to BankRate.com and found accounts at five banks that required no minimum balance and were FDIC insured that paid 4% or more.
John Grobe is a retired federal employee and retired retirement educator with over 30 years of experience in helping federal employees understand their retirement.
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See also
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