“Here’s to a bright New Year and a fond farewell to the old; here’s to the things that are yet to come, and the memories we hold.” – Unknown
As we begin this New Year there are some financial topics that are beneficial to address that will have an impact long after January ends. While not an all-encompassing list (due to a limit on blog space mainly) these are a few of the most impactful ones you should address with your advisor:
Financial Plan Review
This can encompass goals and objectives, cash flow modeling, and retirement needs. Getting it done early in the year gives a nice starting point to achieve and monitor any changes. It will also allow you to review your savings rate and any contributions changes to your retirement plan.
Portfolio Rebalancing
In general, 94% of your investment returns are because of your asset allocation. What has changed given the market highs and how are you managing to your goals? Are you still within your stated allocation? How tax efficient is your portfolio and have you reviewed the underlying expenses?
CARES Act Highlights
No skipping RMD’s this year, IRA and 401k/403b contributions should be reviewed. Roth conversions anyone? Contribution amounts did not change in 2021 for retirement savings. Some good news is that income limits did increase for eligibility. Also, taxes in 2021 changed with some limits and saw standard deductions increase too. Medical expense deductions have been permanently lowered.
Beneficiary and Will & Trust Review
Cannot stress enough that updating and reviewing beneficiary statements, life insurance, pension beneficiary, POA and Health Care powers so they are aligned with your intended directives. Have your children reached adult age? Marriages and divorces can change inheritance outcomes. Even moving to a new state of residence can have an impact.
Charitable and Gifting Strategies
After a thorough and thoughtful review of your situation is there some portion that can be used to assist those less fortunate? Or you may want to gift to others for education and other future needs. There are some tax advantaged ways to accomplish this while you give.
Changing Batteries in Smoke Detectors
No further explanation. Safety first.
We will remember 2020 as a particularly unique year for many of reasons; the pandemic, the elections, stock market highs, and learning a new normal in how we socialize, celebrate and mourn.
Our best wishes to all as we move through 2021 together.
