Your Year-End Financial Checklist


Estate Planning, Financial Planning, Must Have Documents


December 17, 2020

I cannot wait to turn the page from 2020. You?

 

But before we embark on what I know we all hope will be a healthier and happier year ahead, right now is a great time to make sure your finances are in the best shape for the coming year.

 

Here’s my checklist of financial tasks to tackle right now.

 

Make sure you have the right mix of stocks and bonds/cash. Whatever your asset allocation goal is, you need to check your retirement portfolios at least once a year to make sure you’re still on track. For example, let’s say your goal is to have 70% in stocks and 30% in bonds/cash. If you haven’t paid attention for a few years, you may find that your mix is now 80%/20%. No worries, you can move money from one asset (stocks) into another (bonds/cash) without any tax bill as long as the money is inside an IRA or 401(k). An annual “rebalancing” check is smart.

 

Confirm all your beneficiaries. If you’re married, your 401(k) beneficiary will be your spouse (unless he/she gives written permission for someone else to be the beneficiary). But all your other accounts, including IRAs, require you to name a beneficiary. Investment accounts. Life insurance. Bank accounts. Ideally, you should check this annually, but if you’re honest, I know it may be some years since you did this easy maintenance check. If there have been any births/deaths/marriages in your life, you just might need and want to update your beneficiaries. The price of not updating:  the wrong person inherits the asset.

 

Protect your loved ones.  If you somehow have gotten this far in the pandemic without focusing on life insurance, I have one question for you: Are you crazy? C’mon. If there is anyone in your life who is financially dependent on you —a partner, kids, grandkids, siblings, parents, nieces, nephews—you are nuts to not have a term life insurance policy. It’s easy to buy online, and inexpensive. Start the new year knowing your loved ones will be financially okay no matter what the future brings seems like an incredibly powerful gift for them. And for you.

 

Protect yourself. If ever there was a year that did all the explaining for why you need an advance directive, health care proxy and durable power of attorney for finances, 2020 is it. Life is fragile. We may not be in control of that fact. But having these key documents in place is how you take control of what happens to you if you become ill. And a revocable trust is how you ensure a seamless transition of your assets when you do die. (Don’t worry, you stay 100% in charge until that day comes, and you can make changes to it at any time.)

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