5 Things to Consider After Receiving a Promotion or Raise at Work
Congratulations on your promotion or raise at work! As you navigate this new stage in your career, there are a few key issues to consider in order to make the most of your increased income. From reevaluating your budget and tax withholdings to reviewing your retirement contributions, this article covers the top 5 things to keep in mind after receiving a promotion or raise at work.
Congratulations on your promotion or raise at work! This is a big achievement and a sign of your hard work and dedication to your job. As you navigate this new stage in your career, there are a few key issues to consider in order to make the most of your increased income.
First and foremost, think about how this change in income will impact your ability to reach your financial goals. Maybe you've been working towards paying off your debts faster or saving up for a down payment on a house. Whatever your goals may be, a substantial change in income can have a significant effect on your ability to achieve them.
With this in mind, it's important to reevaluate your budget and see if a new income and expense plan is necessary. You may find that you have more flexibility to increase your contributions to tax-advantaged accounts like HSAs, 401(k)s, and IRAs. These types of accounts can be a great way to save for the future while also taking advantage of tax benefits.
One thing to keep in mind is that an increase in your income may also impact your taxable income, which could affect your tax bracket and the amount of tax you owe. It's a good idea to review your tax withholding and consider electing the part-year withholding method to adjust your withholding if necessary. You may also want to consider making quarterly estimated tax payments if you expect your income to be higher.
Finally, if you have a retirement plan with your employer, it's worth reviewing the amount you are able to contribute. If you want to contribute more than the maximum salary deferral amount of $22,500 ($30,000 if age 50 or over), you may want to consider if a Mega Backdoor Roth contribution is applicable.
Overall, a promotion or raise at work is an exciting opportunity to increase your income and achieve your financial goals. By considering the issues outlined above, you can ensure that you make the most of this opportunity and set yourself up for success in the future.
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