Here’s the scenario … you get one of those little reminders that tells you it’s time for your annual financial checkup. Your reaction: I’ll take care of that later. Here’s why you should look forward to it.
Why do I need an annual review? Because things change, and during the course of the last 12 months, you may have … changed jobs, made major purchases, welcomed a new child, retired, bought or sold a residence, decided upon new goals. These developments can change your financial objectives.
Also, it is just sensible to measure your financial progress. If you are not making progress in accumulating assets, or if you are assuming too much risk as a result of your current portfolio or financial decisions, it’s time for change. The annual review is a “deep breath” where you can get away from daily distractions and think clearly about financial planning.
A chance to … stop putting it off. Imagine just letting your investments go for five or ten years, assuming that they’re doing okay while you wonder what the quarterly statements mean. Imagine being a few years from retirement only to find you have less than a year’s salary in savings. Imagine passing away and leaving unresolved money issues for your loved ones, or subjecting them to a contentious probate process. These scenarios are all too real; people run to financial advisors for help with them every day. If they had only reviewed what was happening with their lives financially, they could have planned to avoid these issues in advance. Putting things off can be dangerous.
Why not start the second half of the year right? July is not only the start of the second half of the year, but an ideal time to take a look under the hood financially. During your annual review, you can estimate your net worth, and also possibly learn about any tax changes that might affect your investments, business or estate. It’s also a good time to make voluntary IRA contributions, and get college funding and financial aid applications underway.
Hopefully, you have a qualified financial advisor who you have an existing relationship with. If you don’t, contact one today. Financial planning is not an event you do once in your lifetime. Financial planning should be a priority for you – it can help you manage your money, and allow you to plan for your goals and for the lifestyle you want for the future.
Gerry Mitchell, CFP® is a Representative with Community Investment Professionals and may be reached at (601)693-0200 or gerry.mitchell@invpro.com.
Business
The Annual Financial Checkup
- Business
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- Business Beat
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Who has to file a 2011 income tax return
Taxes are a frequent topic of conversation at this time of year, and a common question is, who has to file a tax return? The rules for filing 2011 tax returns are straightforward for most people.
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Are people really retiring later?
True or false? You may have heard this claim before (or something like it): “Many Americans are being forced to retire later because their savings and investments took a hit in the Great Recession.”
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What’s your emergency fund range?
Dear Dave,
In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses in your emergency fund. My husband and I were wondering how you can determine whether you need to be on the low end or high end of that range?
Amanda -
Remember ‘nanny tax’
Though it hasn’t made headlines recently, the nanny tax is still around – and it still applies to other household workers in addition to nannies. Here’s what you need to know.
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Highlight these tax dates on your 2012 calendar
Get out your red pen and circle these dates on your 2012 calendar if any of the following upcoming tax deadlines apply to you or your business.
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RMD precautions and options
After you turn 70, the IRS requires you to withdraw some of the money in your retirement savings accounts each year. These withdrawals are officially called Required Minimum Distributions (RMDs).
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Getting off on the right foot in 2012
Every year brings some financial change, so here are some relevant changes relating to investment, tax and estate planning for 2012.
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Hold your investments where taxes will be lowest
How much does it matter whether you hold your stock and bond investments in a taxable account or a retirement account?
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Congress extends payroll tax cut for employees
In the end, the Democrats and Republicans in Congress agreed to disagree. Before adjourning for the year, the feuding factions were finally able to set aside their differences to temporarily extend the “payroll tax holiday” for two months.
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