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Four Financial Planning Considerations For A New Year

As the new year begins, it’s a great time to review certain financial topics. Just a few minutes in January could make a big difference by year end. Here are the top 4 categories to consider:

1.Retirement contributions – Often, a new year means a new income which is a great opportunity to increase the contribution to your employer retirement plan. We recommend using just a portion of the salary increase to increase your lifestyle and contributing the remaining to your retirement.

Similarly, if you are now 50 (or turn 50 this year) you’re eligible for ‘catch-up’ contributions for your 401(k) and IRA/Roth IRA. The 401(k) contribution limit increases from $18,000 to $24,000 and the IRA/Roth IRA contribution limit increases from $5,500 to $6,500. If you have already been maxing out your contributions, this is an increase you do not want to miss.

2. Budget – The beginning of the year is a great time to start a budget or review your existing budget. An important consideration is to review any expenses that automatically rise and check for cost savings. Often a simple phone call can reduce your cost back to the original charge. Also be aware of subscription fees and determine if you’re still using the service enough to justify the monthly fee.

3. Evaluate the risks to your plan – A lot can change in a year and when things change it is easy to overlook updating your insurance.

Life Insurance – Did you have a child this year or any other situation that has increased other’s reliance on your income and support?

Policies you haven’t reviewed recently or put off all together? Think about home owner’s, auto, umbrella and disability.

4. Taxes – With tax season approaching, now is a great time to organize your tax documents as well as consider working with a professional, if you do not already do so.  Many of our clients prefer to work with an accountant and we find a lot of value in working closely with them to make sure you are including your tax situation as a part of your overall financial plan.

If you are not happy with your current accountant, we have good referrals we are happy to provide. We think it is critical to work with an accountant that is proactive and not simply a tax preparer who is reactive.

Hopefully this list is helpful as you review your finances. We’re always here to help you with any areas that are needed.