The ultimate year-end financial checklist

Before you start decorating for the holidays and popping champagne for the New Year, check your financial health using a financial checklist. Did your net worth increase? Which investments performed the best? Most importantly, how does it all tie into your plans for the future?

If this is your first time doing a financial review, take your time to learn some of the building blocks that make up your financial health. It will certainly get easier every year, once you nail the basics. If you’re already familiar with the financial review, it shouldn’t take too long to run through the list, so let’s get started!

Review your cash flow

The purpose of reviewing your cash flow is to know exactly how much money is coming in and going out, while also forecasting large expenses that you may be planning for in the future.

❏ Identify all sources of current income (career and side-hustles)

❏ Track and organize all expenses, monthly and annual

❏ Consider boosting your savings by cutting cable TV, monthly streaming accounts, and changing mobile carriers

❏ Evaluate trends or expected changes to current income and expenses (child’s education, aging parent’s care, etc.)

❏ Identify any large expenses planned for next year

❏ Establish or tune-up an emergency fund

Review your investment goals

Investing is a broad landscape and can be overwhelming at times. What’s working for someone else may not work for your unique situation. It’s good practice to always reevaluate your retirement accounts annually, and stay on top of your ever-changing needs. While reviewing your portfolio and rebalancing your investments, it’s important that you remember to factor in how selling off assets may impact your tax liability.

❏ Evaluate your current investments in relationship to your goals

❏ Rebalance your portfolio according to your changing risk tolerance

❏ Meet with your investment advisor to evaluate your financial plan; prepare a list of topics to focus your discussion

❏ Consider using other high-interest accounts to grow your cash or funds (certificates, high-yield savings accounts, etc.)

❏ Look for refinancing opportunities that could lower your mortgage payment

❏ Check your credit report for any signs of fraud. If you want to improve your credit score for a loan, follow best practices.

If you’re ready to take your investments to the next level, contact the Empeople Investment & Retirement Services team to learn how we could offer a complete investment and retirement roadmap to help you achieve your financial goals.

Planning for your retirement

Retirement goes hand-in-hand with reviewing your cash flow and investments. For example, if you’re on top of your expenses and getting market-leading rates on your assets, planning for your retirement will be much simpler. You’ll know exactly the amount you need to sustain your lifestyle during retirement, and can even determine your exact retirement date.

❏ Review target date for retirement and savings needed

❏ Evaluate your strategy to reach your retirement objective

❏ If you’re 73 or older, take your Required Minimum Distribution (RMD)*

❏ Consider whether a Roth or Traditional IRA makes sense for you

❏ Roll-over your old 401(k) accounts from previous employers

Reducing taxes

Be patient and take the time to understand your tax liability. Take advantage of the numerous tax benefits and incorporate them into your overall financial portfolio.

❏ Identify any actions to reduce taxes; speak with a CPA to identify tax benefits

❏ Evaluate and maximize 401(k), IRA or other retirement plan contributions. If you are over 50 years of age, take advantage of increased catch-up contribution limits.*

❏ Monitor tax loss carry-forwards and consider harvesting losses to offset gains

❏ Plan charitable contributions — direct gifts, indirect gifts, split-interest gifts

❏ Consider a Qualified Charitable Distribution (QCD) from your IRA — up to $105,000*

❏ Plan tax-free gifting — up to $19,000 per individual per year ($38,000 for married couples filing jointly)*

❏ Consider using tax-free gifts to fund/contribute to a 529 plan

Review your insurance plans

Be prepared for the unexpected. Many things change as we get older and potentially encounter health issues. Take into consideration the well-being of your dependents, parents and elders.

❏ Review your Health Savings Account contribution

❏ Check to see whether your Flexible Spending Account has a carry-forward option or if you must use it or lose it.

❏ Review your homeowner’s insurance; if you rent, consider adding renters’ insurance.

❏ Evaluate the need for an umbrella policy

❏ Review your deductibles and look out for more efficient options with the same coverage

❏ Review your long-term care and disability income insurance to determine if they continue to efficiently meet your coverage needs

❏ Review your life insurance policies and estimate future health care costs of elders

Don’t forget to review your ancillary insurance needs such as GAP, pet insurance and critical illness coverage. While often overlooked, these insurance products could save you from dipping into your savings or racking up high-interest credit card debt in an emergency.

Estate planning

To round it all off at the end of your financial checklist, take some time to review your estate documents. Your estate represents the culmination of your life’s work, and how you’d want your assets to be passed on to the next generation.

❏ Determine ownership of assets (including real estate) and beneficiary designation

❏ Take note of where your estate planning documents (wills, trusts, durable power of attorney, etc.) are located

❏ Review estate planning documents to make sure they are accurate and current

Financial reviews don’t have to take a lot of time and can even be fun to discuss as a family. Looking back over the progress you’ve made is one of the most satisfying feelings you can experience. If you’re unsure of where to start in your financial review and planning process, our Empeople Financial Guidance Experts can help! Request a free, one-on-one consultation today to get started.

 

*Tax laws are subject to change. Contact a tax advisor for more details.