Thank you for sending thousands of great questions in 2013! In a year with relatively few changes across the personal finance landscape -- other than the massive overhaul of the health insurance marketplace -- your questions helped us all refine strategies to save money on taxes and insurance, max out retirement savings, protect what you have, guarantee retirement income, and help others. Here are some of my favorite lessons to carry forward into 2014:
1. New health care rules are here to stay. Despite legislative and administrative challenges to the rollout of the Affordable Care Act, the new health care marketplace is up and running. You all sent great questions about how to pick the best policy and qualify for the biggest subsidy to help with the premiums, and fellow readers will benefit from this guidance as people sign up for coverage during open enrollment (which ends March 31) and as others retire early or leave jobs and can buy new policies in the middle of the year. See How to Qualify for a Government Health Insurance Subsidy to figure out whether you can get a tax break to help with the premiums and what to do if your income changes in the middle of the year, and see Who Qualifies for a 2014 Health Insurance Subsidy for moves you can make to help you qualify for a bigger health insurance subsidy next year.
Early retirees are one group that can benefit the most from the new health care law, now that insurers can no longer reject people or charge them more for preexisting conditions and can only charge older people up to three times as much as younger people. Also, many retirees qualify for subsidies when their income drops after they leave their jobs. See Health Insurance Options for Early Retirees to learn about their coverage choices and subsidy possibilities.
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Many people who sign up for high-deductible health insurance policies, whether on or off the exchanges or through their employers, will be able to set aside tax-free money in a health savings account. See Contributing to a Health Savings Account in 2014 for more information about who can contribute to an HSA, how to set up an account and what to look for in an administrator. Also see Strategies for Your Health Savings Account for more information to help you make the most of this triple tax benefit.
2. Medicare is always changing. Navigating Medicare for yourself or for an aging relative is no easy feat, and it may be tempting to put your choices on autopilot. But in addition to higher costs (see Medicare Part B and Part D Premiums for 2014 for more information about the premiums and high-income surcharges for 2014), some Medicare Advantage plans (private plans that provide medical and drug coverage) have been reducing their provider networks, dropping doctors, hospitals and pharmacies from in-network coverage. Get more information about what you can do if you discover that your doctor is no longer included in your plan.
Open enrollment for Medicare Part D and Medicare Advantage plans ended on December 7, but you can switch from one medigap plan to another at any time (although you could be charged more because of your health if you switch policies more than six months after signing up for Medicare Part B). See How to Find a Cheaper Medigap Plan and Cost-Sharing Trims Medigap Premiums for more information about your options.
3. You can overcome obstacles to saving for retirement. Kiplinger readers are always eager to find out about tax-smart ways to maximize their retirement savings, no matter their circumstances.
Want to give the kids a jump-start on their savings? Kids of any age can contribute to a Roth IRA as long as they have earned income. See Setting Up a Roth IRA for a Teenager to find out about some brokerage firms and fund companies that have low fees and make it easy for minors to open an account.
Earn too much to contribute to a traditional IRA? See How to Fund a Roth IRA If You Earn Too Much for a strategy that can get you into a Roth IRA even if your income is above the contribution limits.
Don’t have access to a 401(k) or other workplace retirement plan? See Best Ways for the Self-Employed to Save for Retirement for special savings opportunities.
4. There's a tax break for everybody. There was much less anxiety about potential tax-law changes at the end of 2013 than there was last year. But even without major changes, you asked great questions about how to make the most of tax breaks.
Readers are always interested in the child-care tax credit for preschool, summer camp, day care and other costs. See Claiming the Child-Care Credit for Preschool Costs.
Did you move in 2013? You may get a tax break for a job-related relocation.
Did you go to grad school? There’s a tax break for you, too. I also shared details on Tax Deductions for Student-Loan Interest and Buying Long-Term-Care Insurance With Tax-Free Money.
5. You're paying too much for insurance. One way to stretch your paycheck is by lowering your insurance premiums. See An Easy Way to Save on Homeowners Insurance for a great way to cut your insurance costs and prevent you from filing small claims that can lead to a rate increase or get you dropped. Also see The Biggest Car Insurance Discounts and How to Get Accurate Car Insurance Quotes for more information about saving money by shopping around.
And you can save money on life, disability and long-term-care insurance premiums if you lose weight, stop smoking, lower your cholesterol or blood pressure, or are more healthy than when you originally bought your policy -- but only if you know to ask for a reduction. See Cut Your Risk, Cut Your Insurance Rates for details.
6. Mother Nature always lurks. I always get a lot of questions about how people can protect their homes from natural disasters and prepare for storm seasons. And while 2013 was another quiet year for hurricanes in the U.S., unpredictable spring tornadoes devastated communities in Oklahoma. See Last-Minute Moves to Protect Your Home From Winter Storms and Prepare Your Home for Storm Season for steps you can take even with a storm approaching soon. If you have more time, you may want to consider the Costs, Benefits of a Generator.
7. Annuities remain complicated. As readers retire, their questions switch from focusing on how to accumulate savings to how to make the most of their nest egg when making withdrawals. An annuity is a popular, yet challenging, income-producing vehicle for retirees to consider. In 2013, I educated readers about 7 Annuity Mistakes to Avoid, moves that can inadvertently jeopardize valuable guarantees. Also see Choosing an Immediate Annuity for details on buying an annuity that guarantees lifetime income.
8. Generosity has its rewards. Finally, a lot of readers asked about helping other people. Many are helping their aging parents with their financial and medical decisions and were interested in Resources to Help Your Aging Parents.
A lot of readers have saved well through the years and would like to find the most effective way to set aside some of their extra money to help the next generations. Quite a few are looking for tax-smart ways to help their grandkids with education expenses -- see Tax Breaks for Grandparents Who Help With College Costs. And I always get a lot of questions about Setting Up a Scholarship Fund to honor a relative or friend, or to help students in their community or field of study.
Thank you all again for asking such great questions. Hearing from you helps me learn so much about the issues that are important to you. It gives me great ideas for the column, and I pass along many of your questions to my colleagues, too, who use them to write timely articles for Kiplinger’s Personal Finance magazine and on Kiplinger.com. Please continue to send your questions to askkim@kiplinger.com, and I hope you have a wonderful New Year!
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