Revisit Your Fiscal Priorities Each Year
Building a healthy financial life is an important concern that everyone should address with diligence and care. Rather than being a one-time event, evaluating your finances—and ensuring you don’t lose sight of your goals—requires timely, purposeful attention.
Imagine, for example, if you went to the doctor, created a thorough and personalized health strategy, carefully stuck to the plan, and then didn’t have another appointment for 5 years. You might have felt as though you didn’t need to go to for a checkup because your plan helped you make healthy life choices. However, the reality is that a lot can change in a very short period of time, such as medical advancements and new ailments. Though you believed you were on the right path, you might have missed critical guidance and professional insight.
The same scenario applies to your financial life: your fiscal strategies and priorities evolve with you, and they require ongoing oversight for your financial wellness.
Crafting a thoughtfully designed strategy is only the beginning of your financial journey. To make the most of your opportunities, you should revisit your strategy and financial goals at least once a year.
Goal and Planning Refresh: What to Review Each Year
Address Life Changes –
Key question to answer: Have I experienced any major life events?
Your financial strategies should fit your life. So, if your life changes, your finances should change, too. Look back on your experiences since you last updated your fiscal strategy, and uncover any life events you have gone through. Common changes include starting a family, getting married or divorced, switching jobs, and buying or selling a home. However, the list can go much deeper and bring additional complexities to address. We recommend you talk to your financial advisor about any events or experiences that might affect your financial priorities whenever they occur.
Review Your Asset Allocation -
Key question to answer: Is my portfolio correctly diversified to pursue my goals?
A diversified portfolio can help you capture gains when certain asset classes perform well—and protect against losses when others miss the mark. As your life and the markets change, though, your asset allocation needs to evolve as well. You might be closing in on retirement, exceeding your savings goals, facing employment changes, taking more risk than you realized, or going through many other experiences. Your financial advisor can help you understand not only how market performance is affecting your portfolio but also how your life stage and current circumstances should influence your allocation.
Revisit Your Estate Plan –
Key question to answer: Does my estate plan thoroughly and accurately reflect my wishes?
Creating a clear, airtight estate plan is a powerful gift you can give your family. However, one survey found that 63% of Americans do not have a will at all, and only half of seniors age 65 and older have updated their wills. An outdated or missing will can land your assets in probate and create emotional strife for your family during an already challenging time. Avoid these challenges by revisiting your estate plan once a year (or every 3 years if there have been no major life updates) to make sure you have clearly shared your wishes, designated your beneficiaries, and protected your assets.
Analyze Your Tax Liabilities –
Key question to answer: Have changes to tax laws or personal circumstances affected my tax liabilities?
From deduction limits to income brackets to personal exemptions and beyond, tax laws change regularly. In addition, changes in your life, such as a different income or number of dependents, can affect your tax liabilities. Even the most tax-efficient, financial strategy still needs regular review to ensure it reflects current laws and your evolving life. By keeping up with the changing tax momentum—and revising your strategies as needed— you can help mitigate unnecessary tax liabilities and better preserve your assets.
Check Your Insurance –
Key question to answer: Do I have adequate coverage for my current and future needs?
With 5,900+ insurance companies in the United States and its territories, choosing the right insurance for your unique life can be a challenging endeavor. However, if you want to gain the benefits insurance can provide—such as passing wealth to future generations or preparing for high health-care costs later in life—you need to review what you own today and what you need for tomorrow. You will also want to make sure your beneficiaries are up to date and reflect your current financial priorities.
Review Your Retirement Savings -
Key question to answer: Am I saving enough to comfortably retire when I desire?
Pursuing a satisfying, financially secure retirement is an important goal for many investors. However, staying on track toward that retirement can be hard. In fact, a PwC survey found that 28% of employees were saving less for retirement in 2016 than in 2015. When you consider that the average 65-year-old couple who retired in 2016 will spend $260,000 on health care alone, keeping ahead of your retirement savings is critical. Each year, you should review your fiscal strategy and retirement plan to determine if you are positioning yourself for the retirement you desire—or if you need to make adjustments to get back on track.
Just like an annual checkup with your doctor, an annual review of your financial goals, priorities, and strategies is part of a healthy financial life. With this regular review, you’ll better keep your financial wellness in check and catch any problems before they become more serious pitfalls. This can help you—no matter what life stage you’re in.
Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.
The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.
Originally published on April 12, 2017 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.