by Julianne F. Andrews, MBA, CFP®, AIF®
With the start of a new year, most of us begin making plans in all aspects of our lives for the year ahead - and beyond. One area we should all consider is financial well-being -not only our tax outlook, but also investment and retirement strategies, property and personal insurance coverage, and more. In this article, we provide a helpful list of actions you can take now that will cultivate a more fruitful 2018.
- Locate and Organize Important Documents: Many individuals will be making some strategic changes to their investment, savings, gifting and other financial items based on the new tax law changes. Having all your financial documents from 2017 organized and ready for review with your financial advisor and tax professional will make the evaluation and planning process easier.
- Review Tax Withholding and Payments: The new tax law involves more changes than we can address here, and almost everyone will be affected. Make sure to consult your tax professional to determine what changes are in order.
- Evaluate Retirement Plan Contributions: The start of the year is a great time to explore new investment opportunities through employer-sponsored plans or changes to employer-match contribution criteria or percentages. For those with a 401k, 403b, TSP or most 457 plans, 2018 contribution limits are now $500 higher than 2017 levels, allowing you to save up to $18,500. Participants aged 50 or older are still eligible to save an additional $6,000 in "catch up" contributions.
- Examine Account Allocations: If your employer-sponsored retirement accounts are not set to automatically rebalance, determine whether adjustments are appropriate, and whether you want to adjust your risk profile. This is a good idea every year, but given the recent, prolonged run in the stock market, this year it is even more important. Of course, we are happy to discuss this with you to review if this is advisable given your own situation.
- Assess Gifting Strategies: For 2018, the annual gift exclusion has increased to $15,000 from $14,000. If you are making regular gifts to children or others, now is a good time to evaluate whether to increase gift amounts for any recipients, up to the new limit.
- Explore Education Funding: With the passage of the new tax bill, 529 funds may now be used to fund K-12 private or religious school expenses, up to $10,000 per year. Also, families can roll 529 funds over to ABLE accounts, which offer tax advantages for those with disabilities.
- Check Insurance Coverage: Has your home increased in value, or have you acquired art or other valuables that make an insurance coverage increase appropriate? Have you gotten married, retired, had a child, or experienced any other major life change? Any of these events may necessitate reevaluation of insurance coverage, from property and casualty coverage to life and disability plans.
- Don't Forget Your Dreams: As you are adjusting your allocations and examining and organizing your documents, don't forget to consider upcoming goals or plans that may affect your financial strategy. Even if your bank balances are sizeable enough to give you discretionary freedom, it's always a good idea to account for major upcoming expenditures to determine if you should build your balances further or if you have excess liquidity that could be invested.
Here at AFA, we are always ready to help you evaluate your specific situation and strategize to achieve your goals. To discuss these or any 2018 considerations, please give us a call at 770-261-5380. Here's to a healthy and prosperous 2018!