Diane from Banks, Oregon asks: I’m trying to get my financial house in order before the end of the year, so I can start out the New Year on the right foot. Any suggestions or tips for actions to take before the end of year?
Thanks for writing, Diane. It’s really great thinking on your part to try and get organized before the end of the year, so you can start 2017 in great shape and ready to do well. I’ve got a whole slew of good tips for actions you can take to finish strong and start fresh, but I’ll narrow it down to my top five to make it easier for you:
- Make Sure You’ve Maxed Out Retirement Contributions – this is especially true if your employer matches your contributions up to a certain amount in your workplace 401(k) or retirement plan. The contribution limits for 2016 for a 401(k) is $18,000 if you’re under the age of 50, and $24,000 for those over the age of 50. You don’t have to stop at 401(k)s, either – you can still contribute to an IRA and/or a Roth IRA, though the tax treatment for some may be different due to income limits. You can work with your financial advisor or call one of our Investment Advisors here at Zacks Investment Management for help.
- Consolidate and Simplify – my main advice here has to do with investment accounts. If you have two IRAs at two different custodians and an old 401(k) somewhere else, for instance, why not consolidate them all into one Rollover IRA account? Some folks fear that could mean putting all of their eggs in one basket, but that doesn’t have to be true if you adequately diversify within the one account. Consolidating, in this case, can help you avoid overlapping investment strategy, and save you money in fees in many cases. In my view, it makes sense to have all of your investment accounts at one custodian, so you have one online login to view all of your accounts at once. Again, my advice applies to investment accounts, but you could also apply the same approach to your banking, savings, and credit card accounts. Reduce, consolidate, simplify.
- Review Your Beneficiary Designations – on your IRAs, 401(k)s, insurance policies, annuities, and other retirement plans, you are asked to designate beneficiaries in the event of your passing. When was the last time you reviewed your beneficiary designations to make sure they are up to date? This exercise only takes a few minutes and can usually be done online, and it is very important – if your will and beneficiary designations don’t match, your beneficiary designations will almost always trump what you’ve written in your will. So it’s important to make sure they’re up to date.
- Set a Saving Goal – While everyone’s needs are different, generally speaking, I like to tell most clients that if they can put away 20% of their income each month, that is a great approach to saving for retirement. Your savings should be dispersed across retirement plans at work, IRAs, brokerage accounts, and general savings accounts, and should be invested in accordance with your long-term investment objectives, which for most people involves some level of growth (and therefore equity exposure).
- Rebalance Your Portfolio for What Lies Ahead – looking out into the coming year, there are many themes and categories that may emerge as leaders, but in our view stocks appear poised to be a leading asset class. It is our view that investors gain some exposure to different sizes, styles, and sectors when they allocate their portfolios, and Zacks Investment Management has a family of strategies to help you accomplish that. We would allocate your portfolio based on your risk tolerance, desire for long-term growth and/or income, and our market outlook.
Do each of these five things one at a time, and you’ll be poised for a successful 2017!
If you are looking for additional resources to help get your finances in order before the New Year, take a look at our just-released Stock Market Outlook report. This report will give you a deeper look into what you can expect in 2017 and help guide your investing strategy with facts and predictions for the New Year. Get your copy today by clicking on the link below.
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