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Financial Planning Perspectives: 10 Important Reminders For The New Year

By John Jespersen

1. Establish New Short and Long-Term Goals
Saving for retirement, a new home, car or boat? SMART goals can increase: Specific, Measurable, Achievable, Relevant and Time-Bound. SMART goals increase the odds that you accomplish financial projects and important tasks that can lead to having the happy lifestyle you desire.

2. Re-balance Your Portfolio / Review Investments
The only way to return your investment portfolio to the original stock/bond/cash mix is by buying and selling securities until you reach your intended asset allocation. This is best accomplished in consideration of your investment time horizon, risk tolerance, purpose for the investment money, your tax needs and sensitivity, as well as your individual knowledge and understanding of investments. Always speak with your investment or tax professional before taking any action as there as there may be tax consequences due to rebalancing your portfolio.

3. Make Year-End Retirement Account Contributions
The IRS sets the contribution deadlines for your traditional IRA and Roth IRA contributions. For 2018 tax year contributions, the deadline is Monday April 15, 2019. If you have already contributed for 2018, consider making your 2019 contributions early in the year providing more time for your retirement investments to build tax deferred.

4. Review Beneficiaries and Estate Plan
Reviewing your beneficiaries is an important way to make sure your hard earned assets avoid probate and go to the loved ones and/or charities of your choosing. For bank accounts this typically is a Payable on Death (POD) beneficiary designation. For brokerage accounts this is a Transfer on Death (TOD) designation. For retirement accounts it is highly advisable to list your primary and contingent beneficiaries, and review these annually to ensure they continue to be set correctly and are accurate with legal names, addresses and social security numbers.

5. Review Mortgage(s) & Lines of Credit
There is a good chance that you have already refinanced your mortgage(s) to a lower interest rate over the past several years; however, a refinance to repay in fewer years may be advantageous. Paying additional principal each month may be another beneficial consideration. Also review credit cards and other lines-of-credit for options to reduce or manage debt more effectively, thus reducing overall financial liability and risk. Nerdwallet.com is a great place to see which credit cards offer the lowest rate, most cash back or the best perks for you.

6. Review Insurance
Health – if you have a high-deductible health plan take advantage of a Health Savings Account for the triple tax benefits: pre-tax contributions, tax free investment earnings, and tax free payments for qualified medical expenses.

Life – Take time to consider whether your life policies have the right coverage for you and your loved ones. Do the policies you have serve the correct purpose you intend? If not or you are not certain, it is best to work with your agent to review and learn more.

Property & Casualty – Have your policies kept up with property values or the liability coverage needed to protect your family and property? Consider an umbrella policy — adding extra liability coverage to your auto and homeowners insurance policies can protect your finances from expensive lawsuits.

7. Leverage Technology For Greater Efficiency
Take advantage of online technology to improve tracking and management of your financial accounts, automatic savings, and bill paying. There are several cyber-secure ways of increasing efficiency. Start with where you maintain your largest savings balances, such as your brokerage account, because these firms typically offer the lowest cost options as a result of already maintaining your financial business with them.

8. Review Debt / Track Spending
A study by Fidelity on life events and financial wellbeing found that paying off debt is one of the most effective ways to boost your overall sense of wellness. While it is not fun to forgo spending and saving today to pay off debt, it may make you happier and certainly can improve your financial picture in the long run.

9. Increase Savings, Minimize Taxes
Make saving money automatic through payroll deductions, and as suggested, by leveraging technology to redirect deposits and pay yourself first.Review opportunities to minimize taxes, however don’t let the tax-tail wag the dog. Making annual or systematic retirement plan and Health Savings Account contributions can all help to reduce your tax burden while also increasing tax-deferred savings.

10. Schedule a Review Meeting With Your Financial Planner & Advisor
Your Financial Planner and Advisor can be a great source of information, support and financial mentor-ship. You don’t have to go it alone — having a trusted sounding board and professional to assist can make a significant difference in achieving the discipline it takes to be financially successful.

Contact John at john.jespersen@metcalfpartners.com