New Year, No Fear: A Financial Checklist to Get Organized

New Year, No Fear: A Financial Checklist to Get Organized

January 23, 2024

As we embrace the start of a new year, it’s the perfect time to review and adjust our financial strategies. Sometimes, we procrastinate out of fear or anxiety about dealing with the task because it seems too overwhelming. But we aren't just setting New Year's resolutions (which inevitably fall by the wayside); we are taking small steps and following a solid path to get into the best financial position possible. Here's a guide to help you stay on track with your goals:

Review Your Required Minimum Distributions (RMDs): The new year marks a fresh start, and for those of you who have reached the age where Required Minimum Distributions (RMDs) from retirement accounts are mandated, it's crucial to review your RMD strategy. The SECURE Act has brought about significant changes, including the age at which RMDs must begin.

  • Understanding the Rules: Ensure you're clear on the current RMD requirements and how they apply to your various retirement accounts.
  • Timing Your Withdrawals: You have some flexibility on when to take your RMDs throughout the year. Would a lump-sum withdrawal or periodic distributions better suit your tax situation?
  • Take Qualified Charitable Donations (QCDs) early in the year: To be effective, the QCDs must be in conjunction with your earliest RMDs of the year.
  • Considering Roth Conversions: If your income is lower in a given year, converting traditional IRA funds to a Roth IRA could be beneficial, especially if you can manage the tax implications strategically.

Budget Review and Adjustment: Budgets should not be static. As your life evolves, so should your budget.

  • Analyze Last Year's Spending: Look at where your money went last year. Are there areas where you can cut back or others that will need more funds?
  • Set New Financial Goals: Maybe you want to increase your emergency fund or start saving for a new goal. Adjust your budget to reflect these priorities.

Investment Portfolio Rebalancing: Market movements may have shifted your asset allocation away from your target.

  • Assess Your Current Asset Allocation: Does it still align with your risk tolerance and investment horizon?
  • Rebalance if Necessary: Selling overperforming assets and buying underperforming ones can help maintain your desired level of risk.

Update Estate Plans and Beneficiaries: Life changes such as marriage, divorce, and births can affect your estate planning.

  • Review Your Documents: Ensure your will, trusts, and other documents reflect your current wishes.
  • Check Your Beneficiaries: Retirement accounts and insurance policies should be updated to reflect any changes in your life.

Tax Planning: Though taxes are typically filed in April, planning should occur year-round.

  • Gather tax documents early. Get a head start on compiling all the necessary documentation for tax filing.
  • Consider Tax-Loss Harvesting: This can help offset capital gains taxes if applicable.

Insurance Review: Your insurance needs can change from year to year.

  • Evaluate Coverage: Do you have the right amount and types of insurance (life, health, disability, long-term care)?
  • Shop for Rates: Periodically shopping for rates can ensure you're not overpaying for coverage.

This checklist should be a starting point for your financial review as the year begins. Remember, regular check-ins on your financial health can make all the difference in achieving your long-term goals. Here's to a prosperous new year!

The content is developed from sources believed to provide accurate information. The information in this material is for educational purposes only and is not intended as tax, investment, or legal advice. It may not be used to avoid any federal tax penalties. Please consult legal, investment, or tax professionals for specific information regarding your situation. Mayfair Financial and FMG Suite developed and produced this material to provide information on a topic of interest. FMG is not affiliated with the named state-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.