financial plan – Memphis Flyer

Are you starting the year off with fresh financial goals? Great! Recommitting to your finances by focusing on your goals is a great way to enter the new year. One of the best ways to ensure progress toward your goals is by considering how they impact each part of your financial plan and making updates to accommodate them, including the following.

Account for life events.
One of the most important reasons to continually update your financial plan is to ensure it continues to meet your needs as your life evolves over time. Anytime you experience a major life change, such as a marriage, divorce, new baby, death of a loved one, new job, etc., work with your wealth manager to make sure that change is accounted for across all aspects of your financial plan.

Update your goals.
Your goals may not be the same today as they were a year ago. Maybe you successfully saved for a down payment on a home and made a purchase. Perhaps your son graduated college and you no longer need to plan for that expense. Maybe you injured yourself skiing and decided that purchasing a ski condo is no longer something you wish to pursue. Whatever changes may have occurred in your goals over the last year, be sure to incorporate them into your financial plan.

Minimize your taxes.
Proactive tax planning can lead to significant savings over time, which is why it’s important to regularly check in on your tax planning strategies. A fiduciary financial advisor should regularly review your portfolio’s tax efficiency and make changes as necessary to help minimize your tax liabilities. However, it’s still important to check in and ensure you’re taking advantage of all tax planning strategies available to you.

Check in on your investments.
When you and your wealth manager first established your portfolio’s asset allocation, you carefully chose a mix of investments you believed would give you the best possible chance of achieving your financial goals. You should review your investments and target allocation with your wealth manager in your annual reviews, discussing whether any changes should be made (as life events take place and risk tolerances vary).

If you regularly review your investments, your allocation can begin to drift away from your targets (as some sectors outperform others over time). It’s important to periodically rebalance your portfolio back to your original (or an updated) asset allocation. Rebalancing is the process of selling off outperforming investments and reinvesting in lower-performing assets in order to get back to your target allocation. While this may seem counterintuitive, it prevents your allocation from drifting too far from your target investment ranges. This is an important risk management strategy because it prevents one asset type from dominating your portfolio and exposing you to too much risk.

Plan for retirement.
Planning for retirement is an important goal to focus on at any age. In fact, the younger you start, the better off you’ll be when you’re ready to retire. As you review your financial plan, don’t forget to review progress toward your retirement goals. If your financial situation allows, talk with your wealth manager about possibly increasing or even maximizing your 401(k) and/or IRA contributions.

Prepare for emergencies.
If you don’t already have an emergency fund, consider starting one as soon as possible. Generally, you should have at least three to six months’ worth of expenses set aside in a liquid account for emergency use. If you have an emergency fund in place but have recently dipped into it, be sure to focus on building it back up to your ideal level.

Gene Gard, CFA, CFP, CFT-I, is a Private Wealth Manager and Partner with Creative Planning. Creative Planning is one of the nation’s largest registered investment advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.

As pumpkin-spiced lattes turn to eggnog and falling leaves turn to falling snow, it’s once again time to check in on your finances to ensure you’re on track to meet your goals moving forward. Following are 11 important financial steps to take before 2023 turns to 2024.

1. Review your financial plan.

Consider how any changes in your life or goals over the last year may impact your plan. Work with your wealth manager to make any necessary adjustments.

2. Maximize your retirement contributions.

If you’re in a position to do so, consider maxing out your 401k and IRA contributions prior to year-end. The 2023 401k contribution limit is $22,500 (plus a $7,500 catch-up contribution for those age 50 and older), and the IRA contribution limit is $6,500 (plus a $1,000 catch-up contribution for those age 50 and older).

As a reminder, contributions to employer-sponsored plans must be made by December 31st, and contributions to an IRA must be made by April 15, 2024.

3. Take steps to lower your tax liabilities.

Your wealth manager can help you identify opportunities to lower your tax bill by taking advantage of year-end tax-loss harvesting, asset location strategies, charitable giving, and more.

4. Rebalance your investment portfolio.

If you haven’t done so in a while, now may be the time to rebalance your investments to your original (or an updated) asset allocation. This can help lock in investment gains from top sectors and ensure your portfolio remains in line with your objectives and risk tolerance.

5. Finalize year-end charitable donations.

A great way to lower your taxable income in a given year is through charitable donations. If your 2023 income was higher than normal, it may make sense to initiate a donor-advised fund (DAF). A DAF allows you to receive an immediate charitable tax deduction in the current year (by filing an itemized return) while having the flexibility to make donations from the DAF to your favorite charities at a later date.

6. Review your existing insurance coverage and risk management needs.

Consider any changes in your life and financial situation that may warrant additional insurance coverage. Did you have a baby? Get married? Start a business? Get divorced? Your wealth manager can help you determine whether it makes sense to enhance your current level of coverage.

7. Reevaluate your healthcare coverage.

Have any changes occurred in your life or health that may necessitate a change in your healthcare coverage? If so, take advantage of your employer’s open enrollment period to make any necessary adjustments to your healthcare coverage.

Now’s also the time to elect any contributions you’d like to make to a health savings account (HSA) or flexible spending account (FSA).

Speaking of FSAs, if you have any unused funds in your FSA, make a plan to spend them on qualified medical expenses before year-end, or you risk losing them.

8. Check in on your emergency fund.

If you dipped into your emergency savings in 2023, now’s the time to rebuild it. We recommend maintaining three to six months of expenses in a liquid account to help cover any unexpected expenses.

9. Review estate planning documents.

If you haven’t yet implemented estate planning documents, it’s important to do so immediately, regardless of your age. If it’s been a while since you reviewed your existing estate plan, schedule a call with your wealth manager and estate planning attorney to revisit your documents and ensure they remain aligned with your wishes.

10. Review beneficiary designations.

Remember that beneficiary designations can supersede your will and trust directives, which is why it’s important to regularly review all designations to ensure they remain in line with your estate planning objectives.

11. Check your credit report.

Each of the major credit bureaus allows consumers to access one free report each year. Use this opportunity to double check your credit score and identify any unexpected errors.

Gene Gard, CFA, CFP®, CFT-I™, is a Private Wealth Manager and Partner with Creative Planning. Creative Planning is one of the nation’s largest registered investment advisory firms providing comprehensive wealth management services to ensure all elements of a client’s financial life are working together, including investments, taxes, estate planning, and risk management. For more information or to request a free, no-obligation consultation, visit CreativePlanning.com.