After years of working with Atrium Health employees, I’ve seen some patterns. There are certain financial planning challenges that pop up time and time again. As a firm, we’ve grown adept at understanding how these challenges affect Atrium Health employees and how to best address them. Look through this list of Atrium Health employee financial mistakes and see if you can relate to any of them.
Top 8 Atrium Health Employee Financial Mistakes
1. Missing Out on Catch-Up Contributions
Many people ramp up their savings in their 50s so that they can grow their nest eggs before they retire. Thankfully, 401(k) plans provide an easy way to do this through catch-up contributions. Typically, you can save up to $23,000 (for 2024). However, if you’re over 50, you can include an extra $7,500, for a total of $30,500 a year. Be sure to increase your automatic contributions once you reach this age.
2. Not Maxing Out Your Match
Like many employers, Atrium Health provides a 401(k) match up to 6%. If you aren’t able to contribute the full allowable amount to your employer-sponsored account, at least save enough to max out the 401(k) matching benefit. Here’s an example of how this strategy can boost your retirement savings: If you earn $100,000 a year and save $6,000, you’ll receive another $4,000 from Atrium. That’s money you don’t want to leave on the table!
3. Ignoring Roth 401(k) Benefits
You have the choice to contribute to a traditional 401(k) (where you get a tax deduction now and pay taxes on the withdrawals when you retire) or a Roth 401(k) (where your savings will grow tax-sheltered and your qualified withdrawals are tax-free, but you don’t get a tax break on your paychecks).
Since there aren’t income limitations on Roth 401(k) contributions, high-income earners can invest in a Roth 401(k) to earn tax-free income rather than contribute to and convert a traditional IRA into a Roth IRA. This can make a Roth 401(k) a good option for an individual who doesn’t qualify for a Roth IRA, but would like to generate a tax-free retirement income.
Your choice will depend on your unique financial situation. Regardless of where you land, weigh the pros and cons, and work with a professional to run some numbers.
4. Not Looking Beyond Your 401(k)
Speaking of savings vehicles, when you’ve contributed to the limit of your 401(k), don’t stop there. If you’re able to save above and beyond what your Atrium-sponsored retirement plan allows, consider making after-tax, non-deductible contributions to an IRA.
If you qualify for a Roth IRA, that’s one option. But did you know that you can also contribute to a traditional IRA? And depending on your income, you may be able to deduct a portion or all of your traditional IRA contribution. Even without a tax deduction, this step can help you save more for your future[1]—up to $7,000 for 2024 ($8,000 if you’re 50 or older). You also get the benefit of this money growing tax-deferred, which could save you thousands of dollars in taxes.
5. Neglecting to Rebalance
It’s important to rebalance your portfolio every year to make sure your target asset allocation is intact and that your investments are aligned with your risk level. It’s even more critical to do this as you draw closer to retirement.
At retirement, the last thing you want to experience is losing a large portion of your investments due to a misallocated portfolio. Your money should be allocated based on your age, time horizon, and personal risk tolerance, as well as how much risk you need to take in order to meet your retirement goals. Someone who is 20 years away from retirement and okay with losing 15% of their money is going to have a portfolio that looks very different from someone who is retiring in 5 years and isn’t willing to lose more than 8% of their savings.
A financial professional can walk you through the process of determining exactly what level of risk you want to take and can afford to take, and how much liquidity you need, and help you design a portfolio customized to your needs.
6. Not Taking Advantage of Timing
If you’re planning to retire before you claim your Social Security benefits and start taking your required minimum distributions (RMDs), you might want to look into a Roth conversion. Have you earned too much to qualify for a Roth IRA over the years? Do you still want to reap the tax advantages they offer? You can pay taxes now to convert your traditional IRA to a Roth, reducing the amount you’re taxed when you withdraw your savings in retirement.
This needs to be a strategic decision. though; otherwise, you could risk bumping yourself up into a higher tax bracket for the year, since the amount withdrawn from your traditional IRA will count toward your annual income. But if you find yourself in a lower tax bracket before you start dipping into your Social Security and savings, you could save money in taxes down the road.
7. Failing To Address Medicare Surcharges
If you are a high-income earner (over $103,000 for 2024), you’ll face a Medicare surcharge for Part B and D. This is over and above your premium amount. The surcharge IRMAA (income-related monthly adjustment amount) is based on your tax returns. Yours might need to be adjusted because of the timing of your IRMAA charge determination, and because it’s always calculated by looking at past returns. Retirement is considered a “life event”. This allows you to file Form SSA-44 to possibly lower your IRMAA and receive a new determination.
8. Not Optimizing Your HSA for Long-Term Savings
While many people use their HSA funds to pay for current out-of-pocket medical expenses, you can also maximize your contributions, letting them grow for use in retirement when you’ll likely need them most. HSAs are a great complement to your other retirement savings accounts, allowing your IRAs and 401(k)s to cover regular living expenses. In this way, your HSA acts as a contingency fund earmarked just for health costs. Why wouldn’t you just stick with traditional retirement accounts? An HSA receives better tax treatment than any IRA or 401(k). This means it’s a powerful way to maximize your nest egg.
Don’t Make These Atrium Health Employee Financial Mistakes!
We hope you learned from these common Atrium Health employee financial mistakes. The good news is that you don’t have to sort through your retirement and Atrium Health benefit questions alone. At Calamita Wealth Management, we help Atrium employees understand their unique options. We determine the best course of action to meet their specific goals. To learn more, schedule an introductory phone call using our online calendar. You can also each out to us at (704) 276-7325 or myretirement@calamitawealth.com.
About Todd
Todd Calamita is the founder and managing principal of Calamita Wealth Management. This is an independent, fee-only wealth management company located in Charlotte, NC. Calamita Wealth serves people locally and across the country, that focuses on providing wealth management solutions to affluent individuals over age 50 and their families. He has more than 20 years of experience in the financial services industry. Todd Calamita is passionate about helping people have a better life. He does this by designing and implementing customized financial plans that bring clarity and confidence.
Todd is a CERTIFIED FINANCIAL PLANNER™ and CERTIFIED DIVORCE FINANCIAL ANALYST® professional. His educational background includes a Bachelor of Business Administration from Ohio University. He also received a Master of Business Administration from the Weatherhead School of Management at Case Western Reserve University. Aside from planning, he authored Plan Smart: Conquering 10 Common Money Traps. Todd also wrote numerous articles on wide-ranging personal finance topics, from taxes to retirement accounts. He was featured in a Financial Boot Camp TV series as a volunteer. There he was showing people how to make smart decisions with their money. When he’s not working, you can find Todd spending time with his wife, Teresa, and their two sons, Colin and Cameron. He enjoys rock climbing, swimming, and traveling. Todd even has a black belt in Tang Soo Do, a Korean martial art. To learn more about Todd, connect with him on LinkedIn.
