Financial To-Dos to Kick Off 2024

The ringing in of a new year allows us to reflect on the previous year and plan for the one ahead. Here are a few financial “to-dos” to get you on track for 2024.

1. Get Organized 

If it has been some time since you last reviewed your long-term financial plan, the start of a new year is a great opportunity to gather updated information and revisit your finances holistically. 

Collect your account statements

Year-end statements will be a helpful tool when updating your financial plan. Be sure, also, to check for any former employer retirement accounts that may be floating in limbo. It may make sense to consolidate accounts, where possible, to simplify your financial picture.

Get a pulse on your budget

It’s important to understand where your money is going. Put together a budget to track your income and expenses to more clearly pinpoint what is coming in compared to what is going out. This may allow you to identify potential opportunities to cut back in certain areas, and save more. 

Spending may materially change from year-to-year and ensuring that your financial plan reflects updated spending is critical. Consider 2020, for example, where travel was limited due to the pandemic. Many saw an uptick in spending once restrictions were lifted.

Confirm any upcoming age milestones/life events

There are certain triggers within a financial plan that should be planned for. Some examples include:

Age related milestones:

• Age 50: Eligible to make catch-up contributions to retirement accounts
• Age 55: Eligible to make catch-up contributions to HSA
• Age 59 ½: Eligible to withdraw from IRAs without 10% early distribution penalty
• Age 62: Eligible to claim Social Security benefits
• Age 65: Eligible for coverage under Medicare
• Age 70 ½: Eligible to make Qualified Charitable Distributions
• Age 73: Required Minimum Distribution Age

Life events:

• A move
• A marriage
• A birth in the family
• A job change
• Retirement
• Illness/Death in the family

Having a grasp on your balance sheet, cash flow, and important milestones is a great launching point to start off the year.

2. Reset Savings 

There’s often a “set it and forget it” approach to savings. Utilizing scheduled contributions or systematized savings can be a helpful way to automate things, but it should still be reviewed on a regular basis. 

Could you be saving more? 

Are you saving in the most efficient way by considering the tax impacts of certain accounts? 

Are you taking full advantage of an employer match in your retirement account?

Here are some contribution limits to be mindful of:

• Elective deferrals (401(k), 403(b), 457):

• • Contribution Limit: $23,000
  • Catch Up (Age 50+): $7,500
  • 403(b) Additional Catch Up (15+ Years of Service): $3,000

• IRA Contributions (Traditional and Roth):

• • Combined Contribution Limit: $7,000
  • Catch Up (Age 50+): $1,000

• Health Savings Account (HSA):

• Individual Coverage Contribution: $4,150
• Family Coverage Contribution: $8,300
• Age 55+ Catch Up: $1,000

3. Optimize Your Portfolio 

Emergency fund

Unexpected expenses can come up at any time, and having a cash emergency fund can help you weather the storm without going into debt. A general rule is to have enough reserve to cover three to six months of living expenses.

Investment risk tolerance

When revisiting your risk tolerance, you may actually find that you have a higher capacity for risk than you initially thought. This means you are invested more conservatively than you probably should be, which may lead to lower returns over time in the context of your risk tolerance. 

On the other hand, you may have pending life events that may require you to balance your portfolio with less volatile asset classes. Risk tolerance does not look the same for everyone and will likely change over time. It’s important to revisit and adjust as needed.

Review performance of investment accounts

How did your portfolio perform? Did your investments do what you expected them to? How did you react during volatile moments? 

We are offering a personal portfolio analysis to evaluate your investment portfolio and help you stay ahead of risks and opportunities. 

Contact us today to set up this complimentary analysis. 

4. Review Your “Worse Case Scenario”

No one enjoys thinking about intimidating, what-if scenarios. This can often lead to neglected estate plans and insurance precautions. Setting a date on the calendar once a year as a checkpoint can provide assurance that these items don’t fall through the cracks.

Insurance Coverage

You will want to revisit life insurance, disability insurance, and potentially explore long-term care insurance. These are not a necessity for everyone, but should be explored in the context of your full financial plan.

Estate Planning

Account titling, ownership, and beneficiaries should be reviewed on a regular basis. You also may be in a position for your estate documents, such as wills, powers of attorney, or trusts to be updated or drafted, depending on your situation. These considerations are especially important if any changes within your life or your family’s life have occurred (new child/grandchild, marriage, divorce, death, etc.).

Despite the best of intentions, many action items are difficult to follow through on. If you do find yourself feeling overwhelmed by your finances, unsure of the decisions relating to the above, or just want some guidance, consider working with a financial planner. We are here to help you follow through on these financial resolutions.