32 Financial Planning Opportunities to Kickoff 2024
The start of a new year is a great time to take stock of your finances and make plans for the future. If you're not sure where to start, here are a few key issues to consider.
Personal
Review your progress. Take a look at your goals from last year and see how far you've come. This will help you identify areas where you need to make adjustments.
Set new goals. If you didn't have any goals last year, or if your goals have changed, now is the time to set new ones. The best goals are SMART (Specific, Measurable, Achievable, Relevant, and Time-bound).
Life events. Think about any major life events that are coming up for you or your immediate family this year, such as a move, marriage, higher education, job change, retirement, or health-related issues. These events can have a big impact on your finances, so it's important to plan for them in advance.
Plan for Important Milestones. Will you or any family members reach a milestone birthday this year? If so, there may be new financial planning opportunities to consider.
Cash Flow
Review your income and expenses. Will your household income or expenses change this year? Track your income and expenses for a month to get a clear picture of where your money is going. This will help you identify areas where you can cut back or save more money.
Adjust your budget. Once you know where your money is going, you can adjust your budget to make sure you're living within your means.
Retirement savings. Are you able to contribute to an Individual Retirement Account (IRA) or Roth IRA? If you're not already saving for retirement, now is the time to start. Make sure you're contributing enough to your retirement accounts (and capturing employer-matching contributions) to reach your goals.
Health Savings Accounts (HSA). Do you have a high-deductible health plan at work? If so, you may be eligible to fund a HSA. HSAs may be the best thing in the tax code. They are triple tax-advantaged accounts that can be used to pay for qualified medical expenses. And depending on your account balance, you may be able to invest your HSA dollars to pay for future healthcare expenses too.
Flexible Spending Accounts (FSA). Do you have money left in your FSA from last year? If so, consider spending those funds before any grace period expires.
Required Minimum Distributions (RMDs). Are you required to withdraw money from your retirement accounts this year? If you are charitably inclined and over age 70 1/2, you might consider a Qualified Charitable Distribution (QCD) to satisfy your annual RMD.
Assets and Debt
Review your investments. Take a look at your investment portfolio and make sure it's still aligned with your risk tolerance and goals.
Rebalance your portfolio. If your asset allocation has gotten out of whack, rebalance your portfolio to bring it back into line. Be sure to consider any tax consequences before you rebalance. You want to hold tax-efficient investments in your taxable accounts, and tax-inefficient investments in tax-advantaged accounts.
Check your emergency fund. Is it time to adjust to adjust or refill your rainy day dollars? Are you earning any interest on your account? Today, cash should be working for you. If you aren’t earning much interest, it may make sense to open a High-Yield Savings Account, Money Market Account, or buy a Certificate of Deposit.
Pay down debt. Do you have high-interest debt you want to tackle this year? Prioritize those debts first. Are you co-signing any loans? Check in with the other parties to confirm the terms, payment history, and current status.
Borrowing. Might you need to borrow money this year? If so, what are your options and how will they impact your finances?
Credit. Have you reviewed your credit report and score lately? Consider freezing your credit if necessary.
Insurance
Health. Do you expect any changes in your health or medical needs? Review your health insurance coverage accordingly.
Life. Is your life insurance coverage sufficient? Do you need disability or long-term care insurance?
Disability. Statistics show that nearly 1 in 5 Americans will become disabled for a year or more before they turn 65. Do you have enough disability insurance coverage to replace part of your paycheck if you are no longer able to work?
Long-Term Care. Medicare does not cover care in nursing homes, assisted living facilities, or at home. Is now the time to consider purchasing a long-term care policy to help with activities of daily living (bathing, dressing, eating, transferring, toileting, and continence).
Property. Have you made improvements to your home or acquired valuables? Update your homeowners or renters insurance as needed.
Taxes
Tax docs. Gather all your tax documents and organize them for filing Form 1040. Did you make taxable gifts or want to split gifts from last year? Collect the necessary documentation for filing Form 709.
IRA contributions. Did you miss out on an IRA contribution last year? If so, you have until tax day (excluding extensions) this year to contribute for last year.
Roth conversion. Would a Roth conversion be likely to lower your lifetime tax bill? Strategic Roth conversions right after you retire (and before you claim Social Security) may be a great idea depending on your situation.
Capital gains. Do you own investments (in taxable accounts) that might generate capital gains or income distributions this year? Consider selling in advance to optimize your tax situation.
Tax loss harvesting or tax gain harvesting. Do you have unrealized gains or losses in taxable accounts that you can use to your advantage this year?
New laws. Are there any new laws that might impact your taxes or financial plan? If so, consider how your savings strategies, tax situation, or estate plan might have been affected.
Legal and other
Estate plan. Do you have an estate plan in place? If not, now’s the time to get one.
Titling and ownership. Review the titling and ownership of your assets to ensure clarity.
Fiduciary roles. Are you serving as a fiduciary for any accounts or trusts? Review your duties and performance. If you are an executor or trustee of an irrevocable trust, consider whether a distribution and election under the 65-day rule would be prudent.
Contracts and agreements. Are there any new contracts or agreements you’ve entered into, or have any expired? Understand the implications for your finances.
Business changes. If you own a business, are there any upcoming changes that you need to plan for?
Conclusion
By taking the time to answer these questions, you can gain a clear understanding of your financial situation and make informed decisions about your money in 2024. Remember, a little planning now can save you a lot of stress and money in the long run.
To your Atomic Retirement,
Ryan Kilkenny
P.S. If you have a question or would like help planning for retirement, you can schedule an appointment here.
