The beginning of a new year is an excellent time to prepare a financial roadmap not only for the new year, but also for the long-term.
Measuring Your Financial Health
While everyone’s situation is different, here are a few ways to measure your financial health:
- Is your monthly cash flow positive?
- Are you on track towards major financial goals such as retirement or saving for your children’s college education?
- Are your taxes as low as they could be?
- Are all beneficiary designations up to date?
These and other factors can be a good gauge of your financial health and should be reviewed at least annually.
Financial Audit Checklist
As you look to create a financial roadmap for 2022, it is a good idea to do a “financial audit” of where you stand and how 2021 went.
Here are some checklist items to consider:
- Review your spending for 2021. Did you stay within your budget? Do you need to adjust your budget for 2022?
- Portfolio rebalancing. With the solid gains we saw in the stock market during 2021, your portfolio may need to be rebalanced to ensure that it is in line with your financial goals and risk tolerance.
- Review your tax withholdings. Did anything change in your life in 2021 such as getting married, divorced or having a child that could impact your withholdings? Did you have too much or too little withheld in 2021? It’s a good idea to review this as we enter the new year to be sure your withholding elections are correct.
- Review your estate planning and beneficiary designations. Again, did your marital status change or did you have a child? Are beneficiary designations on retirement accounts and insurance policies up-to-date and in line with your wishes for these accounts upon your death?
It makes sense to discuss these and a host of other issues with your financial advisor to ensure you are on track.
Working with an Advisor to Prepare a Financial Roadmap for 2022
Deborah Silva, Financial Advisor of the Lee Group of Wedbush Securities says, “If you haven’t already, now is a good time to work with your financial advisor to develop a financial roadmap! As you make your resolutions and set your goals for this year and beyond, be sure to include your financial advisor in the discussion, so that they can work with you to map out the road to achieving your financial goals, whether it be college savings for your child/grandchild, early retirement, starting a business or buying a second home. Your advisor will continuously review with you and modify your plan as your objectives change. It is the planning we do TODAY that makes for a successful TOMORROW!”
Have there been life changes that might impact your financial planning, such as getting married, divorced or becoming widowed? Did you welcome a new child or grandchild to the family? Did your portfolio do well in 2021 perhaps meriting a review? Have your goals changed?
These and other life changes are all good reasons to review your plan and your portfolio with your financial advisor, including issues like:
- Retirement strategies
- Your current portfolio
- Future investment strategies
- Estate planning strategies
As we approach the new year, some questions to ask your advisor include:
- Should we consider adjusting my portfolio heading into 2022? The markets did well in 2021 and at the very least your portfolio may need to be rebalanced back to its target asset allocation.
- Am I on track to the type of retirement that I envision? If yes, that’s great. If not, then your advisor can work with you to help you get back on track.
- Are there steps we can take to minimize my taxes in 2022? This might include tax-loss harvesting in your taxable accounts or investment more in IRAs and in your 401(k).
- What can I do to help deal with rising healthcare costs both now and when I retire? One option might be to contribute to an HSA if you are eligible.
- How much of an emergency fund should I have to be prepared for an emergency? Your advisor should be able to provide a number of ideas here.
Having a financial roadmap is important for 2022 and all years. Your financial advisor is a great partner to help you design a plan and implement it. He or she is also the best person to help you review your plan and make changes down the road as needed. Contact your Wedbush advisor to schedule a planning session to design your 2022 financial roadmap.
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These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.