At the start of a new year, many of us sit back and make resolutions about a number of different things. It may be spending more time with your family, losing weight, traveling more, any number of things that are important to you. These are probably things that you have resolved to do previously but many times as the year goes on, you find that your resolve has dissipated.
However, resolutions around financial goals can be different. Many of these are things to consider and decide on. At the end of the process, you can feel confident that you have considered what is important for your financial health and move forward to the end of the year resolving to do the same the next year.
So, what should your financial “check list” be for 2020? Here are five things to act on or consider.
- Check your retirement savings accounts – Contribution limits for retirement plans change over time. It is important to check this at the beginning of the year and reset your savings rate if the limits have increased. For 401k plans, if you are under 50, your contribution limit is going to $19,500 (from $19,000) in 2020. If you are 50 or older, your catch up amount is going to $6,500 (from $6,000) in 2020. Make sure to set up your payroll deductions to take advantage of these increased limits. It is also a good idea to look at your investment options. Have your plan options changed? Are you feeling uncomfortable with the financial markets? Any of this should prompt a call to your financial advisor to discuss potential changes. And, if your plan is not set up to automatically rebalance, doing so in January of every year is a great way to begin the new year.
- Review your credit report – You are entitled to three free credit reports each year and you should definitely take advantage of this. The three major credit reporting agencies are Experian, TransUnion and Equifax. Request a report from each of these and review it for accuracy. Errors in these reports are not uncommon. You can fix these by contacting the credit reporting agency directly however, you are responsible for identifying the error and making sure your report is accurate. A poor credit report could adversely affect your ability to obtain a loan or result in higher rates and fixing an error can be time consuming so it is best to check proactively every year.
- Keep good financial records – Many times it is a scramble to gather tax documents as April 15 approaches. Set up a 2020 tax file in January and put all relevant materials in that file as the year goes on (property taxes, charitable deductions, business expenses, etc.). At the end of the year, instead of trying to locate your documents, everything will be in one place and simply need to be organized to ensure that you are taking all of the allowable deductions and tax credits you are entitled to.
- Check your legal documents beneficiary designations – It is a good idea to review the beneficiaries on your life insurance policies and retirement accounts annually. Things change over time and those changes may necessitate a change in these designations. You should also review your will and financial and healthcare powers of attorney. Are you still comfortable with your designations for executor, trustee and powers of attorney? If not, it is fairly simple to contact your estate planning attorney to make those changes which typically involve just a codicil to your legal documents. A good idea would be to put together a summary sheet for all of these items so that you can simply review that each year and make changes as needed.
- Make sure you are prepared if something unexpected happens – Review your life and disability policies. Has your life situation changed (divorce, retirement, additional children, etc.)? Any of these could mean that your insurance may no longer be adequate (or in the case of retirement, you may not need much of the insurance that you have). Make sure to check with your financial advisor if any big life events have happened to ensure that your insurance portfolio still meets your needs. If nothing much has changed over the last year, you are likely in good shape and can move forward with confidence.
None of the items above are too time consuming. In fact, you can probably knock this out on a Saturday afternoon unless you need to follow-up with your estate planning attorney or insurance professional. As you check off items on this financial checklist, always remember to leverage your advisor team at Atlanta Financial for any questions along the way, that way you can move into the new year with confidence that you are organized and on the road to financial well being in the New Year!