A team to guide you
Our team of advisors guide you through various retirement scenarios, quantify your goals and plan for life’s uncertainties before crafting a retirement plan that aligns with the future you envision.
The ringing in of a new year allows us to reflect on the previous year and plan for the next. Here are a few financial to-dos to get you on track for 2023.
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 in one holistic view.
Collect your statements
Year-end statements will be a helpful tool when updating your financial plan. Be sure to also check for any old employer retirement accounts that may be floating in limbo. It may make sense to consolidate accounts where possible to simplify your finances.
Get a pulse on your budget
It’s important to understand where your money is going. Make a budget to track your income and expenses so you can see where you can cut back and save more. Spending may materially change from year-to-year and making sure that your financial plan reflects updated spending is key. 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 monitored. 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 65: Eligible for coverage under Medicare
- Age 70 ½: Eligible to make a Qualified Charitable Distribution
- 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 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: $22,500
- Catch Up (Age 50+): $7,500
- 403(b) Additional Catch Up (15+ Years of Service): $3,000
- IRA Contributions (Roth and Traditional):
-
- Total Contribution Limit: $,6,500
- Catch Up (Age 50+): $1,000
- Health Savings Account (HSA):
- Individual Coverage Contribution: $3,850
- Family Coverage Contribution: $7,750
- Age 55+ Catch Up: $1,000
3. Optimize Your Portfolio
Emergency fund
Unexpected expenses can come up at any time, and having an emergency fund can help you weather the storm without going into debt. A general rule is to save enough 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
2022 was a tough year in financial markets. 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 the scary what-if scenarios and this can often lead to neglected estate plans and insurance precautions. Setting a date on the calendar once a year as a checkpoint can make sure these important 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 and should be explored in the context of your full financial plan.
Estate Planning
Account titling, ownership, and beneficiaries should be reviewed. This is especially important if any changes in the family have occurred (new child/grandchild, marriage, divorce, death, etc.).
Despite the best of intentions, many resolutions are difficult to follow through on. If you do find yourself feeling overwhelmed by your finances or just want some guidance, consider working with a financial planner. We are here to help you follow through on these financial resolutions.
Advisory services are offered through the Burney Company, an investment adviser registered with the U.S. Securities & Exchange Commission. Registration as an investment Adviser does not imply a certain level of skill or training.
