Most of us have made New Year's resolutions, and many times, we want to take charge of our financial future in the new year. It is now the start of tax season, and with that, many people are reviewing their W-2's, bank, brokerage and 401(k) statements that have been arriving in the mail over the past few weeks. Do you have any idea how your entire household portfolio allocation looks? Most people do not. They chose their investments at the time they started a new job or opened a brokerage account, and in most cases, they have not revisited these choices. Did you know that you should re-balance your accounts at least annually to make sure they still meet your allocation preferences? Also, you may have funds in the same asset class in many different investments, and it is close to impossible for most people to determine if all of their assets are allocated correctly.
With the new tax laws, it makes sense to look at your tax withholding for 2019 to make sure that it is accurate. If you have student loans, this should be the year that you finally address them, and determine the best strategy for repayment. In many cases, people are not in the best repayment plan, and the amount of money that can be saved over the life of the loan through lower payments, possible loan forgiveness, refinancing or public service loan forgiveness can be quite substantial. In some cases, it also makes more sense to change your filing status to married filing separately if there is income disparity between the two wage earners to significantly lower your payments under an income driven repayment plan.
It is also important to review your beneficiaries on all of your accounts to potentially avoid probate. It is amazing how many people have outdated beneficiaries, or have failed to name contingent beneficiaries on their insurance and investment accounts. It makes sense to look at your benefit plans at work to make sure you are taking advantage of everything that is offered, and that you are considering tax savings, and if it makes sense to keep your money in a traditional or Roth 401(k) if this is offered.
Make this the year that you finally start planning for your financial future, and can feel comfortable that you are on the right track for retirement. Please contact me if you would like to schedule a preliminary call to get on the right track this year.