As changes in your life occur, are you adjusting your financial plan accordingly? We’ve put together this 10-point checklist of key areas of your financial life. Take a look and see if you are ready for the year ahead.
1. Life Changes (e.g. retirement, new family members, change of residence, etc.)
- Do you expect changes in your personal life that will significantly impact your financial plan (switching jobs, changing your marital status, moving to another residence, etc.)?
- Are there significant events occurring that will impact your family members, such as children going to college or getting married, parental needs, etc?
2. Overall Financial Plan Updates
- Do you have a documented financial plan that has been reviewed within the past six months?
- Do you expect significant changes to your income and expenses within the year?
- Does your budget reflect your values and priorities?
- Have you taken into account long-term compensation (e.g., stock options, restricted shares, etc.) and long-term savings (e.g., retirement plans?
3. Emergency Fund Updates
- Do you have an emergency fund that would cover three to six months of expenses?
- Is your emergency fund able to be accessed easily if necessary?
4. Insurance Policies and Coverage
- Homeowners/renters: is it sufficient to cover your home and property against disasters?
- Life insurance: will it replace your income for your dependents?
- Disability insurance: do you have income support if you are injured or disabled?
- Healthcare insurance: do you have suitable healthcare insurance?
5. Is It Time to Refinance?
- Are your current loans or credit cards at higher-than-market rates? Should you consider refinancing or consolidating these loans?
- If you have outstanding loans or credit, do you have a plan for paying back what you owe in a timely manner?
6. Gifting to Heirs or Charities
- Have you considered making gifts to heirs while you are living to reduce the size of your estate?
- Do you have a charitable giving strategy? Have you considered bunching charitable donations for potential tax benefits?
7. Estate Plans and Associated Legal Documents
- Do you have an estate plan in place that accurately reflects your intentions?
- Do you have a living will, healthcare directive, healthcare proxy, and durable power of attorney?
- Have any changes occurred that might require updates to these documents?
8. Tax Changes that May Impact You
- Did any tax law or IRS rule changes occur that will impact your financial planning? These could include the following:
- Changes in tax rates or deductions
- Changes in contribution limits to retirement accounts
- Changes to required mandatory distributions from retirement plans
9. Eligibility for Benefits and Retirement Planning Opportunities
- If eligible, should you take advantage of catch-up contributions to your retirement accounts or HSA?
- Are you hitting one of the key dates for eligibility for a government benefit or incentive this year (e.g., 50 for catch-up retirement account contributions, 62 for Social Security, 65 for Medicare or 70 1/2 for qualified charitable distributions)?
10. Retirement Income Plan (if retired or semi-retired)
- Have you reviewed the status of your income sources (Social Security, pension payments, annuities, etc.)?
- Have you reviewed your retirement expenses?
- Do your required minimum distributions (RMDs) cover the balance of these expenses?
- Is your retirement plan able to weather the key retirement risks (e.g., longevity, healthcare, inflation and poor market returns)?
- Have you made adequate accommodations for healthcare needs, including appropriate Medicare options?
