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Financial to-do list for the New Year

Review your finances as the year wraps up and be that much more prepared for the future.

When nearly the entire year is in your rearview mirror, will you be ready for the calendar to flip over? Sure, you’ll focus on surviving the holiday season and making New Year’s Eve plans, but what kind of financial shape will you be in as the year comes to an end?

Because a little tidying up in that department can be well worth your while, here are a few tips to consider before the clock strikes midnight on December 31.

Catch up with your financial advisor

Scheduling an appointment with your financial planner for an annual review of your portfolio is wise regardless of when it takes place. But if you’ve put it off until now, make it happen in the coming days to proactively go through asset allocation and overall performance.

Is the amount of risk you’re taking on consistent with your overall goals and objectives? While it’s often difficult to anticipate the future, think about the year ahead and whether impactful decisions or changes are on the horizon. It could affect the way you invest.

Evaluate your tax situation

While taxes aren’t due until mid-April, this is an appropriate time to briefly ponder whether you need to budget for a payment to the IRS or anticipate a refund.

Additionally, tax-loss harvesting may allow you to recoup funds when it’s time to settle up with Uncle Sam. If a stock you own is down considerably and you don’t want to stick with it long-term, you can sell it at a loss to offset capital gains and income. The government allows a deduction of up to $3,000 from your ordinary income, though any decision to do so should be in line with your overall investment strategy and not just for the tax break.

Assess your benefits

If it’s been awhile since you contemplated your benefits package, now is an ideal time to do so. How much are you contributing to your 401(k) plan or Roth IRA? Individuals are currently able to invest up to $18,000 annually into 401(k) plans – should your amount increase, decrease, or stay the same? If you have the luxury of extra cash, perhaps you earned an ample holiday bonus, you can make one last contribution to your retirement plan(s) before the year ends.

Make a point of also reviewing your options with respect to medical, dental and vision plans. Do they fit your needs? Consider your life today as opposed to the last time you worked through your benefit options and ask yourself if supplemental life insurance, short-term and/or long-term disability insurance coverages are necessary.

Lastly, use up remaining balances in your flexible spending accounts, which set aside pre-tax income to pay for healthcare expenses, child care expenses and commuting costs.

Give a little bit...

Lastly, there’s no better time to consider making a charitable contribution than during the holidays. Best of all, it can be a win-win situation as not only are you giving back and supporting a worthy cause, but many charities qualify for tax-exempt status. Thus, contributions can be claimed on your taxes. Research options on how you can donate your time or your finances and make sure to get a receipt, if applicable.


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