Finding the time during the busy holiday season to sit down and take a look at your financial statements can be difficult, but it’s absolutely necessary if you want to start 2018 on firm financial footing.
Here’s a handy checklist of your financial to-dos before year’s end:
>> Schedule a meeting with your financial advisor.
Your financial advisor will help you evaluate your accounts and goals — both short- and long-term — and gauge whether you’re on track. Come prepared with the following questions:
• How have my investments performed this year? Do I need to rebalance my portfolio?
• Is my asset allocation still appropriate for my retirement goals? Should I be moving toward a more conservative approach?
• Should I take any steps before the end of the year to reduce my tax burden next year?
>> Re-evaluate life insurance needs.
If you have an adjustable life insurance policy that allows you to modify your coverage and costs, now’s the time to see if you need to make any adjustments. If you’ve moved into a larger home or welcomed a new addition to your family, you may want to increase your coverage.
If you need to reduce your premium cost, you can look into ways to make your payments more affordable without canceling your policy outright. If you’ve paid off your mortgage, seen your children through college and are looking to retire, you may want to look into downsizing your policy and enjoy lower payments while you’re at it.
If you don’t have life insurance, you may want to take this opportunity to consider whether it’s right for you and your situation. If you have financial dependents, or have a mortgage and other debts that would be difficult for your family to cover without you, it may be a good idea to get a policy.
>> Raise your retirement contribution.
If you’re in your prime earning years, seriuosly consider contributing as much as you can into tax-advantaged retirement accounts — up to $18,000 annually into a 401(k) and an additional $5,500 into your Roth or traditional IRA.
Once you hit age 50, you can make “catch-up” contributions to your 401(k) (up to $6,000 more per year) and Roth or traditional IRAs (up to $1,000 more per year). However, only a small percentage of workers actually maximize these contributions.
If you’re not able to put away thousands of dollars every month toward your retirement, that doesn’t mean you can’t improve on your current savings. Consider bumping up your 401(k) contribution by 1 percent every year. You’ll barely notice the difference in your monthly paycheck, especially if you’ve received a raise.
>> Make a financial New Year’s resolution.
Make one more move to set yourself up for success: set a personal financial goal for 2018. Whether it’s getting out of credit card debt, paying off your mortgage, or starting a college fund for your grandchild, focusing on a short-term achievement will help you stay on track with your long-term financial goals.
David Kimura is the CUSO Financial Services LP (CFS) investment program manager for Hawaii State Investment Services at Hawaii State Federal Credit Union providing investment, retirement and financial planning services to members. He can be reached at email@example.com or (808) 447-8083.