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Clean slate for finances in 2012

Financial news in 2011 was a reminder of the many bumps and bruises remaining from the recent real estate bust and financial meltdown that followed. It has left investors and homeowners skeptical of what could possibly be hiding around the corner for the economy.

Even retirees without exposure to real estate or equity markets over the last few years have experienced a squeeze on their monthly incomes from lower interest rates and increased expenses.

Yet 2012 is a clean slate and time to freshen up the financial prospects of retirement. It’s time to get your eyes off the rearview mirror and onto running a tight ship for the future. Here are some quick tips for saving money and kicking your finances into gear:

n Understand your financial landscape. Broadly speaking, are you seeking to accumulate wealth or generate income with your financial resources? All too often, investors have “people” who run money for them, but lack any solid framework for future goal clarification and achievement. If your past goals started and ended with make money in your portfolio, it’s time to view your big picture. Clarifying your financial objectives as it pertains to your future needs will help your financial professional reach for the proper tool box when structuring your investment portfolio.

n Who’s steering the ship? From multiple advisers, investment managers, accountants and attorneys, many families have a handful of professionals in their corner. Sometimes the quantity of advice can become a bottleneck in your system. It is time to play quarterback of your advisory team, or pinpoint one of your advisers to begin coordinating the advice coming from every corner.

n Capitalize on 401k maximum contribution increases and higher income limits for deductible IRA contributions. 2012 rings in the new year with increases on 401k contribution limits from $16,500 to $17,000. Catch-up contributions for participants 50 years of age and older remain at $5,500. Modified adjusted gross income limits for deductible IRA contributions have increased for filers who are also participating in a 401k or have a spouse participating in a 401k.

n Lower your taxable income with a health savings account. Those who meet the high insurance deductible requirements of an “HSA” have the opportunity of reducing taxable income by the amount of contributions up to $3,100 for individuals and $6,250 for married filers. If you do not use the money on qualified healthcare expenses, the remaining funds roll to the next year and continue to grow tax-deferred.

n Check to see if you can qualify for the “Saver’s Credit.” You may be surprised to find you could qualify for a tax credit given to low- and moderate-income workers who saved for retirement. If you meet the income requirements, you could contribute $2,000 to a retirement account as late as April and get back up to $1,000 as a tax credit. There is the possibility of multiplying these numbers by two if you are married and filing jointly.

Successful management of finances begins with a plan to take care of items that can be controlled. It takes time and discipline, but the fruits of the labor can be rewarding.

Griffin Dalrymple, investment manager with Opinicus Wealth Management, can be reached at 941-896-9909.

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