Financial matters are often easy to put off. Dwight Eisenhower said it best when noting “what is important is seldom urgent, and what is urgent is seldom important.” The fact that financial planning lacks urgency compared to the daily tasks that consume most of our attention doesn’t diminish the importance of making sure our finances are in order. Let’s prevent another year from passing by in which we put off the important. There are even some immediate tax benefits to being proactive. Here are some of the most important financial considerations to conduct an end-of-the-year financial checkup.
Max out retirement contributions.
You have until you file your tax return next spring to make a 2016 contribution to an individual retirement account (IRA), but 401K contributions are only deductible when they’re made during the same calendar year. The 2016 contribution limit is $18,000 for a 401K and $5,500 for an IRA. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.1
Schedule a meeting with a financial planner.
The end of the year is an ideal time to meet with a financial planner, but if time is too limited, be proactive in setting one up at the beginning of the new year. A Certified Financial PlannerTM can help you develop financial goals and ensure you’re on track to meet them. A CFP® will periodically review your investments, update beneficiaries, and work with attorneys and tax professionals you may already work with to ensure continuity exists within your overall financial plan.
Ensure your estate plan is up-to-date.
Estate planning allows you to have a plan in place to direct how your assets should be distributed after you die. It ensures your wishes are carried out and your loved ones are protected both emotionally and financially. You should check your estate plan or written will periodically as changes to beneficiaries often occur due to marriage, divorce, or newborn children or grandchildren. Assets can also change in value over time and you may want to ensure that they’re equally distributed within your written will.
Organize your finances.
Life gets busy and it’s important to take some time to locate some of the following documents: stock certificates, savings bonds, brokerage statements, tax returns, mortgage statements, life insurance policies, individual retirement account statements, employer-sponsored retirement plan statements, pension documents, annuity contracts, housing and land deeds, bank account information, and estate planning documents (including health care instructions), as well as safe deposit box keys.2 You’ll want to ensure that all of these items are not only together, but in a safe place. Consider preparing a list identifying your records, including a list of financial accounts and all user names and passwords, and their location.
This article merely skims the surface of all that’s required to protect your today and tomorrow, but it’s a good starting point from which to conduct an end-of-the-year financial checkup. Additionally, setting aside time each year to concentrate on financial matters is a wise investment of your time and money, one you’ll thank yourself for later.
About the Author: Barney Lane, Certified Financial Planner™
Joseph "Barney" Lane is a service-oriented, client-focused Financial Advisor in DeLand, Florida with more than 30 years of experience in financial services.
Advisory Services offered through Investment Advisors, a division of ProEquities, Inc., a Registered Investment Advisor. Securities offered through ProEquities, Inc., a Registered Broker/Dealer, and member FINRA and SIPC. Lane Financial Strategies is Independent of ProEquities, Inc.