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It’s A New Year! Is It Time To Reevaluate Your Financial Plan? Thumbnail

It’s A New Year! Is It Time To Reevaluate Your Financial Plan?

By Angela Dorsey

We survived 2020, and now it’s time to transition to a new year and all it will bring! A new year is often a time for fresh starts, intentional planning, and renewed motivation to conquer goals and accomplish things that are important to you. As you enjoy this much-needed fresh start, take some time to think about your long-term plans and reevaluate your decisions, especially in the following key areas.  

Tax Strategy Planning

In the wake of a major election and a change in administration, questions naturally arise about how tax laws could change and how that will affect your wallet. If tax rates increase for your tax bracket, you may want to shift some of your savings allocations to tax-deferred vehicles such as a 401(k) or a traditional IRA. The recent stimulus bill contains several tax law changes, including the ability to roll forward unused FSA funds from 2020, (1) 100% deductible business meals, and penalty-free retirement plan withdrawals for families affected by declared disasters. (2) Because of how often new tax legislation is introduced, tax planning is not a one-and-done deal. Revisit your plan to make some shifts that will help you in the long run. 

Tracking Retirement Funds

As we learned from the Great Recession, it is important to stay proactive when it comes to your cash flow and retirement funds. The temptation to adopt a “set it and forget it” approach can create financial blind spots, especially when the demands of work and family make it challenging to carve out time to review finances. If you have not kept track of your investment accounts, retirement plan balances, and other assets, commit to checking the pulse on the health of your family’s finances at least once a quarter, if not monthly.

Insurance Coverage

Inadequate insurance coverage is a common issue that can derail retirement plans, especially in the event of unforeseen health problems or injuries that force individuals to retire early. A 2020 study found that only 54% of Americans have life insurance and 40% of policyholders reported that they wished they had obtained coverage sooner. (3) Life insurance policies are not all created equal, and many policies offer living benefits that you can draw from if you need help paying medical bills or other expenses. It’s prudent to make sure you have the proper policies and coverage for your unique situation.

Estate Planning

Regularly reviewing your estate plan is a crucial component of your financial strategy. Life moves quickly, and it is all too easy to forget how much can happen in a short period of time. Arrivals of new children or grandchildren, health conditions, asset purchases or liquidations (such as buying a new home), marriage/divorce, retirement, unemployment, remarriage, and deaths in the family can make a significant impact on the big picture of your estate plan. Any time you experience a life change, make sure it is reflected in your estate plan. 

Let Us Partner With You

As we look ahead to a new year, it’s wise to anticipate and prepare for the changes that every season of life brings. If you are ready to reassess your long-term goals or would like to discuss how to build a solid foundation for your future, schedule a free introductory 30-minute phone call today!

About Angela

Angela Dorsey is the founder and fiduciary wealth manager at Dorsey Wealth Management, a fee-only financial planning firm helping successful women and couples prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a Certified Financial Planner™ (CFP®) and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband and two children. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.

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(1) https://www.marketwatch.com/story/covid-relief-bill-will-let-fsa-money-roll-over-into-2021-a-win-for-parents-and-those-with-live-in-elderly-loved-ones-11608825806#:~:text=Workers%20could%20set%20aside%20up,year%2Dend%20or%20be%20forfeited.

(2) https://www.journalofaccountancy.com/news/2020/dec/tax-provisions-in-covid-19-relief-bill-ppp-and-business-meal-deductibility.html

(3) https://www.policygenius.com/life-insurance/life-insurance-statistics/