12 Smart Financial Moves for the New Year

January is the perfect time to make a few key financial moves that can help you throughout the year and make it easier to reach your goals. Here are a dozen steps to save money, take advantage of new financial strategies and protect your identity and your accounts:

1. Cut insurance premiums. Re-shopping your insurance—especially car insurance—is an easy way to free up extra cash. First, ask your insurer for a list of discounts and make sure you're getting all the breaks you deserve. If you have a new job with a shorter commute, or if your teenage driver's grades have improved, you may qualify for extra discounts. If you have low mileage and safe driving habits already, you may save more by signing up for a data-tracking program, such as Progressive's Snapshot, State Farm's Drive Safe & Save or Allstate's DriveWise.

Also consider boosting your deductible from $250 or $500 to $1,000, which can cut your premiums and prevent you from filing small claims that could result in a rate increase. Then put the savings in an emergency fund so you're prepared if you do have a claim. Get quotes from a few other insurers for the same amount of coverage—some may find your situation more attractive than others. But let your current insurer know before switching. Some will match another insurer's low rate to keep you as a customer. See 6 Steps to Cut Your Car-Insurance Rates and How to Cut Your Car Insurance Premiums. Then take similar steps to see if you can save money on homeowners or renters insurance.

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2. Review your beneficiaries. The money in your 401(k)s, IRAs and other retirement plans, as well as the proceeds from life insurance policies, will go to the beneficiaries you designate even if you leave other instructions in your will. Take a few minutes each January to review your accounts and make sure your beneficiary designations are still up to date, especially if you were recently married or divorced, had children or grandchildren, or experienced other life changes. Also review other legal documents, such as your will, powers of attorney and health-care proxy, to make sure they still reflect your wishes. See 8 Smart Estate Planning Steps to Die the Right Way for more information.

3. Protect your identity. In this era of data breaches, it's more important than ever to protect yourself from ID theft. A credit freeze has become one of the most effective ways to safeguard your credit, even if you haven't been a victim of ID theft. See Freeze Your Credit in 3 Steps. While you're at it, go to www.annualcreditreport.com and get a free copy of your credit report from each of the three credit bureaus to see if there is any suspicious activity and to get ideas for ways to improve your credit record.

4. Sign up for an online Social Security account. Go to www.ssa.gov/myaccount and open an online Social Security account, even if you don't plan to retire for many years. The account helps you check for errors in your earnings statement that could reduce future benefits (see How to Fix Your Social Security Earnings Record) and gives you an idea of how much you can expect from Social Security. It can also help protect you from Social Security fraud. See Protect Against Social Security Fraud With an Online Account for more information.

5. Boost your retirement-savings contributions. If you've been maxing out your 401(k) or are turning 50 this year, you'll want to increase your automatic contributions to take advantage of higher limits and catch-up opportunities. You can invest $18,500 in a 401(k), 403(b), 457 or the Thrift Savings Plan in 2018, a slight increase from last year. Plus, you can add an extra $6,000 if you're 50 or older (even if your 50th birthday isn't until later in the year). Also consider setting up automatic contributions from your bank account or paycheck into an IRA every month. Doing so makes it easy to save before you have an opportunity to spend it. You can contribute up to $5,500 to an IRA for 2018, or up to $6,500 if you're 50 or older. If you work but your spouse does not, you can contribute to an IRA in his or her name, too. See You Can Contribute More to Your 401(k) in 2018 for the income limits for Roths and the contribution limits for IRAs and 401(k)s.

6. Make a charitable-giving plan. The string of hurricanes and natural disasters in 2017 made many people consider developing a charitable-giving plan early in the year so that they're prepared to help out after an emergency. As you set aside money for charity, think about the ways you can contribute, whether it's by writing a check, giving appreciated securities, giving to a donor-advised fund or making a tax-free transfer from your IRA (if you're older than 70½). See Smarter Ways to Give to Charity. Also find out how the new tax law may affect your charitable-giving strategies. See 26 Ways the New Tax Law Will Affect Your Wallet.

7. Review your investment portfolio. It's a good idea to review your portfolio at least once a year to make sure your investment allocations are still in line with your goals, especially after the big run-up in the stock market over the past year. See Review Your Portfolio in 3 Easy Steps for more information about reviewing your investments and rebalancing your portfolio.

8. Gather and toss tax records. You should be receiving your year-end brokerage statements and other records soon, along with your 1099 and W-2 forms. After that, you can toss monthly statements, pay stubs and receipts you don't need for tax filing if they match up with the year-end reports. Meanwhile, start gathering your tax records so you don't miss valuable deductions before the deadline.

If you're getting a refund, file your return as soon as possible after you receive your documents to thwart ID thieves. (The tax-filing season will open January 29, and the deadline is April 17.) After you file, you may be able to throw away some old tax files. The IRS generally has three years after the tax-filing deadline to initiate an audit. See When to Toss Tax Records for more information about what you should keep and what you can shred.

9. Plan to make the most of the new tax law. The massive new tax law changes some key financial strategies not just for charitable giving, as mentioned in item 6, but also for IRA conversions, home-equity loans, medical-expense deductions and 529 college-savings accounts. Learn about the new law and how it can affect your financial moves for 2018. See 26 Ways the New Tax Law Will Affect Your Wallet.

10. Plan for your RMDs. If you're already older than 70½, or if you're hitting that milestone this year, start planning for your required minimum distributions. Find out which IRAs, 401(k)s or other accounts you'll need withdraw money from, and think about which investments you'd like to tap.

Also consider whether you want to make a tax-free transfer of your RMD to charity, which will become more popular now that fewer people will be itemizing under the new tax law. If you're turning 70 this year, figure out when you'll need to take your first withdrawal. See 10 Things Boomers Must Know About RMDs From IRAs. Also see When to Take Your First Required Minimum Distribution From an IRA.

11. Make Medicare decisions. If you're turning 65 this year, begin thinking what you will do about Medicare. If you don't have health insurance through a current employer (or a spouse's current employer), then you will need to sign up within the three months before the month you turn 65 and the three months after that. You can sign up at www.socialsecurity.gov/medicare. See When to Sign Up for Medicare for the basic sign-up rules.

If you're still working and have health insurance through your employer (or if you're covered by your spouse's employer), you may not need to sign up yet. However, you need to be very careful to avoid paying a late-enrollment penalty or missing out on important coverage. See When to Sign Up for Medicare—and Why You Might Want to Delay. And figure out how you're going to fill in the gaps in Medicare—such as with a Medicare supplement policy and Part D prescription-drug coverage, or by having medical and drug coverage through a Medicare Advantage plan. See How to Fill Medicare Coverage Gaps for more information.

12. Choose your military pension. If you're in the military and joined from 2006 through 2017, you'll have to make a big decision about your retirement benefits this year. Your choice: Stay with the current retirement system, which provides a generous pension but only if you stay for 20 years or more. Or switch to the new system, which reduces the pension but also provides matching contributions for the Thrift Savings Plan that current service members can keep right away. See The Big Pension Decision Military Service Members Must Make in 2018 for more information.