The following are eight
areas of your financial life you should probably review on a yearly basis:
INVESTMENTS. Review your investment strategy – make sure it’s in
line with your current investment goals. Look over your portfolio positions and
revisit your asset allocation. Are you still adhering to your investment
policy? Do you have an investment policy?
RETIREMENT. Take a look at your overall retirement strategy.
Does it (still) make sense or not? If applicable, take your RMD (required
minimum distribution) from your traditional IRA. Take a look at and/or max out
contributions to IRAs, 401(k)’s. Consider maxing-out catch up contributions, if
applicable. Finally, consider Roth IRA conversion scenarios.
RETIREMENT INCOME. If you’re not already taking your retirement
income, what will your withdrawal rate be? Is it guaranteed? Is it predictable?
What happens if the economic environment changes?
TAXES. Search for possible credits and/or deductions
before the year comes to a close. Have a qualified tax professional put
together a year-end projection, including Alternative Minimum Tax (AMT). Review
appreciated property sales and both realized and unrealized losses & gains.
Take a look back at last year’s carry forwards. If you’ve sold securities,
gather cost basis information. Look for any transactions that could potentially
enhance your circumstances.
GIFTS and CONTRIBUTIONS. Plan charitable contributions or
contributions to education accounts, and make any desired cash gifts to family members.
Review and fund trusts, as applicable. When was the last time you had your will
and/or trusts updated?
INSURANCE. Are your policies and beneficiaries up to date?
Review costs, beneficiaries, and any and all changes that may affect your
insurance needs. Will your coverage cover your family’s expenses for at least
the next three to five years? Are you planning to have in-home care if and when
you grow old? What happens if you get hurt and can’t work?
PERSONAL CHANGES. This year, did you: get married or divorced?
Move or change jobs? Buy a home or business? Have or adopt a child? Receive an
inheritance or gift? See a severe illness or ailment affect a family member?
Lose a family member? Discover that your parent(s) would need assisted living?
BIRTHDAY MILESTONES. Did
you turn 70 ½ this year? If so, you must now take Required Minimum
Distributions (RMDs) from your IRA(s). Did
you turn 65 this year? If so, you’re now eligible to apply for Medicare. Did you turn 62 this year? If so,
you’re now eligible to apply for Social Security benefits. Did you turn 59 ½ this year? If so, you make take IRA distributions
without penalty. Did you turn 55 this
year? If so, and you retired during this year, you may now take
distributions from your 401(k) account without penalty. Did you turn 50 this year? If so, “catch-up” contributions may now
be made to IRAs (certain qualified retirement plans).