Helpful miscellaneous articles regarding
our retirement plan and planning. Like
you, I review my retirement nestegg and plan from time to time. Recently, I went though some continued
education for some credentials I maintain and it occurred to me that we all
could use a review about these issues.
So with your help, we will share and post articles and info that may be
helpful and of interest to many of you in this section.
Some info may be not applicable and slightly dated
but other tips can be useful for a review!
Year-end financial checklist:
9 personal finance tips for 2020
As this year
comes to a close, you and your family reflect on where you’ve been and where
you’d like to go.
·
And
your financial health is a big part of the picture. As the calendar flips to
the new year, here are some things to check off your financial wellness list
before year-end.
Review or update your beneficiary designations
Make
any needed updates to the beneficiary portion of your bank accounts, retirement
accounts, life insurance policies and annuities.
Have
you gotten married or had a child within the last 12 months? Or perhaps a loved
one has exited your life through a divorce or a death. Choosing a beneficiary for your life
insurance policy is a decision you should consider carefully. This is important
because beneficiaries trump who’s named in a will.1
To
help you keep track of your beneficiaries, write down their names along with
the date when any updates were made. Also, be sure to name a contingent
beneficiary in case your primary beneficiary passes away. Store this document
in a binder and review it annually.1
Don’t
forget to name a beneficiary on your IRA so that it doesn’t have to pass
through your estate. This could result in an unintended beneficiary getting
paid or your heirs could miss out on important tax advantages.2
Review tax withholdings
Review
your W-4. 2019 was the first year filers completed tax returns under the
new legislation. Some people ended up with smaller refunds than they were used
to, while others owed money.
As
of June 2019, the average refund was down 1.7% from the previous year — $2,729
in 2019 versus $2,778 in 2018.3
Visit
the IRS
website to
find out how much you should withhold from each paycheck.3
Review your insurance needs
Health
insurance, life insurance, homeowners insurance and auto insurance — oh my!
The
types of insurance you can have seem endless. It’s important to reevaluate your
insurance policies regularly — to make sure you’re properly insured and are not
paying too much for them.
Reviewing
homeowners insurance
Homeowners
insurance rates can fluctuate due to crime and bad weather near your home,
which can have a negative impact on rates.
Also,
have you accumulated many more possessions since the time you purchased your
policy? If so, you might want to reevaluate your homeowners policy to be sure
it covers everything of value.4
Reviewing
auto insurance
Every
state has minimum car insurance requirements — and you might need just the
minimum coverage. However, make sure your coverage equals your total assets
(your house, car, savings and investments) in case the costs related to the
accident exceed your coverage limits — and your assets are seized to pay for
them.
Your
auto insurance might include liability coverage, bodily injury liability (BIL),
property damage liability, personal injury protection, uninsured/underinsured
motorist coverage, collision, and comprehensive.
Review
the types of coverage your state requires and read up on potential rates and
discounts or work with a professional to get an affordable rate.5
Review your portfolio — diversify if need be
Take
a close look at your investments.
Your
plan should fit your current life situation, which can change in just a year.
Did you just inherit some money? Or perhaps your job is less secure than it was
last year. As your life changes, your investments and financial portfolio might
need another review.6
For
instance, stocks and bonds in your investment portfolio should be appropriate
for your age and how well you tolerate risk.
Your
portfolio should reflect investment objectives that are appropriate for your
current life stage. Your age, risk tolerance, tax status and time horizon,
among other factors, are all important. Speak with a financial professional
regarding your personal situation.
Meet
with your financial professional to see how changes in your life may have
impacted your overall financial portfolio.
Spend
eligible flex dollars
A
healthcare flexible spending account (FSA) can save you money — as long as you
spend the pre-tax dollars before the end of the year. Otherwise you run the
risk of losing it (unless your employer offers a grace period).
In
2019, employees could squirrel away as much as $2,700. So, make that
last-minute dental or chiropractic appointment while there’s still time. Or
stock up on qualified medical supplies such as contact lens solution and
high-SPF sunscreen.
A
tip for next year’s open enrollment period: If you, your spouse or your child
is going to need medical services, you should consider contributing to your FSA
at least the amount of your health insurance deductible.7
Check
in on your emergency savings account
In
an ideal world, you’d have three to six months’ worth of emergency savings set aside.
The
reality is that can be difficult when you’re caring for your family’s everyday
needs. However, it’s important that you don’t fall into the camp of 55 million
Americans (roughly 25 percent) who say they don’t have any emergency savings.8
Remember
that an unexpected emergency, such as a car repair or a medical expense, could
set you back financially. To help ensure that doesn’t happen, build up your
savings by automatically depositing some money from your paycheck to a
dedicated savings account.8
If
you have kids, contribute to their college fund
College
tuition isn’t for the faint of heart. But having a tax-advantaged strategy in
place can help you prepare for the rising costs. If you already have one, try
to contribute as much as you can.
As
you’re preparing your child (or children) for his or her upcoming education,
whether it's elementary, high school or college, there are many different types
of vehicles that could help you reach your goals. Speak to a financial
professional to explore the possibilities and to see what would be a good fit
for your specific situation.
Make
charitable donations
Donate
to an organization that’s close to your heart. The benefits are two-fold: You
will reduce your taxable income and feel good about giving some of your
hard-earned dollars to a good cause. It’s a win-win.
Start
planning for next year’s memories
Your
financial checklist should include a savings plan for a family vacation or
another memorable event.
You
can open a dedicated savings account and set up an automatic transfer of funds
to get you closer to your destination. And don’t minimize how effective
dropping your loose change into a change jar can be.
You're
now on your way to making every moment — and penny — count.
This information is a general
discussion of the relevant federal tax laws provided to promote ideas that may
benefit a taxpayer. It is not intended for, nor can it be used by any taxpayer
for the purpose of avoiding federal tax penalties. Taxpayers should seek the
advice of their own advisors regarding any tax and legal issues specific to their
situation.
(As with any of these informative articles,
anyone who needs someone to talk to about
this
very subject contact me and I can direct you to a knowledgeable advisor).
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