Five Items to Include in Your Year-End Financial Check-Up
Advice courtesy of Brian Lethert, owner of Spitfire Financial Group
1. Tax Planning Strategies
– Charitable contributions
– Roth conversion
– Spend “Flex Plan” dollars to avoid losing them
– Open and fund an HSA (if HDHP qualified)
2. Pay Yourself First
– Ask yourself, “Am I saving or investing 10% of my income?”
If yes, consider giving yourself a raise. Increase savings by 1-2%.
If no, maximize your employer-sponsored retirement plan at work or at least contribute up to the company match.
– Initiate the habit of increasing savings by 1% annually.
– For those without an employer-sponsored retirement plan, start an IRA or Roth IRA for yourself and save monthly.
3. The Bucket Strategy for Asset Allocation
– Short Term Bucket: Emergency Reserves
These are typically in low volatility, principal safe asset class. Benchmark 3-6 months of living expenses.
– Long Term Bucket: Retirement or goals with 10-plus year timeline
These are typically in growth-oriented asset classes.
– Mid-Term Bucket: Goals between the long and short term timelines
4. Estate Planning
– Known as the “What ifs?”
For example, “What if I die? What if I become disabled?”
These are difficult questions that many people avoid answering.
– Review your beneficiaries.
– Draft or update your will, power of attorney, living will, healthcare POA, etc.
– Put together a plan for multi-generational wealth through legacy plans or planned giving.
– Determine if there are special circumstances. Perhaps a trust is appropriate?
5. Seek Professional Guidance
Whether you choose an accountant, financial advisor, insurance professional, attorney or all of the above, it is essential to find a professional you like and trust to help employ your financial goals.