Financial Homework Before The Year Ends

//Financial Homework Before The Year Ends

As we approach the end of the year, we all too often become so busy that we forget to attend to some very important issues.  Just as we should remember to change the batteries in our smoke detectors on the 1st of April [National Smoke Alarm Day] we should equally be vigilant to check a few other things in December. Find a day to devote a few hours to the following:

  1. Insurance policies: December is a wonderful time to check your insurance policies and retirement accounts to see if the beneficiary designations are correct and up-to-date.  I spoke recently with two clients, one divorced and the other with twins who turned 18 this year.  In both cases their beneficiary choices were outdated.  The divorcee had neglected to switch her beneficiary to anyone other than her ex-husband.  For the mother of twins it became time to name them contingent, or secondary, beneficiaries.  Such a simple ‘check-up’ can assure that your wishes are followed. Life is filled with changes, and requires regular adjustments.
  2. FSA Balance: Another good thing to do toward the end of the year is to check your Flexible Savings Account Balance.  Remember that you face a “use it or lose it” rule in such a plan and it might be time for a quick exploration if there is a way to take full advantage of the balance before the 31st of December.  And at the same time, you are probably in an “Open Enrollment” period to make changes for next year.  Remember that changes on your Flex Plan is one, but don’t forget to add a little to your retirement plan, review your investments and reconsider your risk tolerance as it relates to your plan. Employee benefit reviews should also include an exploration of your health & dental insurances for next year.
  3. Retirement Plan Distribution: For those 70 ½ or older, don’t forget to take your required minimum distribution from your retirement plan.  After all of the tax-deferrals that the Government has provide, they require that you take a minimum amount out and pay your tax on that amount.  The most important reason to be paying attention: failure to take the required minimum distribution results in a 50% penalty of the amount required.  That is a huge ‘heads-up’ before the New Year.
  4. College Savings Plan contributions: One thing I have enjoyed doing was making a year-end contribution into our grandchildren’s 529 College Savings Plans. The clothes and toys we previous bought were never quite those for which they were hoping.  So, we thought supporting their education was a much more meaningful gift over the whole of their lifetime.
  5. Reflect: Finally, the end of the year is a time for reflection.  From reviewing what you accomplished this year, set some new goals for next and set your priorities in life.  I am often driven by passion for the relationships I have, the activities of which I engage and the impact on others that I might have.  It seems that we face such big challenges in life, feel sometimes divided as a Country and unclear as our futures.  We individually can have an impact on our futures based on our attitudes and what we choose to do today.

As always, should you find you need assistance in completing this homework, we are able and ready to help.

We hope that you have a great Holiday Season and in the midst of all the celebrating, can find the time to tend to the aforementioned financial homework above.