From Madrona Financial Services:
12 Ways to Wrap Up Your Year
The holidays are in full force, and we’re in the mood to give! Instead of turtle doves or mocking birds, we’ll share with you 12 tips for wrapping up your 2016 with wisdom that will keep giving beyond the holiday season.
12. Tis the Season to Give Back!
It’s that time of year when we’re all in the giving spirit. While we always support charitable giving, the holidays are a great time to give back and can also provide an added strategic benefit by minimizing your taxes. Appreciated assets may be donated to lower your tax burden, and if you’re 70.5 or older, the same can be said for a portion of your required minimum distributions to a qualified cause. When deciding on charities to support, choose something that your passionate about, vet it out to make sure that the funds are disbursed the way you’d like them to be, and make sure the organization falls under the 501c3 category if you’re hoping to qualify for tax benefits. Note that donations must be made by the end of the year to count for 2016.
11. Make for a Happy New Year! Hit Your 12/31 Deadlines.
Before the New Year’s Eve celebrations, you need to make sure you’ve taken care of some important business. If you’re 70.5 or older, your deadline for taking your required minimum distributions is 12/31 or you could face a steep 50% tax penalty. There are plenty of planning opportunities here depending on your individual situation. If you’re not retired, now is a great time to get ahead on maxing out your contributions to your retirement accounts (IRAs, 401ks, etc.). While the formal deadline is April 15th for tax purposes, this gives you time to focus on your 2017 contributions from the start.
10. Do Your Loved Ones Know What You Know? Be Sure to Voice Your Wishes!
While you’re spending time with family this holiday season, you may want to consider using some of this time to make sure everyone is in the loop on important family financial matters. A recent study found that 44% of people found money conversations more uncomfortable than politics or even illness. Keeping your family informed can be crucial for preserving your wealth and leaving a legacy. Use this opportunity to make sure that you have an updated will and estate plan and that those who will be impacted know what could come. These sorts of conversations can mean the difference between financial security and a family feud.
9. Interest Hikes Are Coming to Town!
Interest rates have been abnormally low for longer than anticipated. Make sure that your portfolio is equipped to handle a long overdue monetary policy change. Especially those nearing retirement, over-reliance on bonds can be destructive to your portfolio’s value given the inverse relationship of interest rates and bond prices (when one goes up in value, the other tends to go down). If necessary, rebalance your portfolio and make sure that your allocation matches your risk tolerance.
8. It’s Beginning to Look a Lot Like 2017.
2017 is around the corner. Most of us set resolutions for 1/1, but few of us make a plan for accomplishing and following through. In fact, according to StatisticBrain.com, 45% of us frequently make New Year Resolutions (34% of those are money related) and only 8% of us follow through on average. Setting goals can help us to know where we’d like to be, help us focus our efforts, and hold us accountable. Gear up to be part of that 8% this year by creating an actionable plan that allows you to start 2017 off running.
7. Baby, It’s Cold Outside (Especially When You Forget a Coat).
If there’s one thing in life that’s certain, it’s that nothing is certain. Per a Bankrate.com study, 66 million Americans have no emergency fund. Not only do they have no plan in place if a long-term care event, disability, or even death occurs, but they have nothing to cover even a few months of expenses. If you think about it, a financial plan that only works if nothing bad happens is more of a bet. Be sure that you prepare for what could go wrong to afford the luxury to invest in what goes right.
6. Don’t Be Late on Flex Spending!
If you have a flexible spending account associated with your health insurance, now is the time to book your preventative care appointments for the next few months. Most often, you have until March to spend the money, so it may behoove you to schedule these before it’s too late!
5. We Wish You a Merry Tax Season!
Tax season isn’t officially over until April, but that doesn’t mean you should wait until the last minute. Get organized now and be proactive. It’s likely far easier to find and compile your relevant receipts and information while they’re still relatively fresh and before they’re intermixed with next year’s paperwork. You’ll be thankful come April 15th!
4. Run, Run Roth IRA! Take Advantage of Any Conversions.
If you qualify, you may be able to convert some of the money from a traditional IRA into a Roth IRA (where you pay taxes up front, but growth and income aren’t taxed when you pull from them later). While April 15th is the deadline for making Roth contributions, the conversion deadline is 12/31.
3. Have a Strategy for Rocking Around Your Social Security.
Social Security is complex and ever-changing. In fact, there will even be changes in 2017. You’ve been paying into Social Security for your entire working life. You deserve to receive your legal maximum. That’s why it’s pertinent to know when to claim, how to file, and strategies that will work best given your individual situation.
2. Last Holiday Season, How Were Your Finances?
Now is the time to do a year-end review. Understand what went out as expenses versus what came in. Sometimes taking even a few minutes to review your statements can help you notice monthly expenses that you may not have realized you were paying, like a subscription to a music service you never use. Now is also a popular time of year for hackers to steal your credit card information, and reviewing your statements periodically can help you catch those fraudulent charges quicker allowing you to take action.
1. Make Every Day the Most Wonderful Time of the Year!
At Madrona Financial Services, we hope that you’re able to spend your time doing what you love with the people you love more often than just once per year. Financial security is no easy feat, but it can be a lot easier with a plan and help from a professional. Whether you’re in retirement or working toward it, we’re happy to help you create an actionable plan that serves your needs and goals to and through retirement, helps you preserve your wealth, and creates a legacy. We invite you to come in for a complimentary financial review to get your financial house in order. Click here to schedule your review.
Happy Holidays from Madrona Financial Services to You and Yours!