Is Your Financial Plan Running On All Cylinders?
Everyone who owns a car knows that in order to keep it running in tiptop shape, periodic servicing is required. Oil changes, chassis lubrication, tire rotation, and tune-ups are vital in maintaining a reliable automobile. If these service requirements are ignored, intentional or not, you may find yourself stranded with a car that can’t take you where you want to go.
A financial plan, like a car, needs periodic servicing and review to get you where you want to be financially. Recent changes in the tax law, a job change, births, a change in marital status, deaths, inheritances, or a change in plans for your family’s future may indicate a financial plan tune-up is needed. We feel you should normally review your financial plan at least annually and right after tax season is a great time because you already have your financial situation in mind. A formal review might include the following seven steps:
- Reevaluation of financial goals and objectives.
- The creation of updated net worth and cash flow statements.
- Review of insurance coverage to determine adequacy of current life, medical, disability and casualty coverages.
- An examination of your tax efficiency – making sure your tax liability is as low as possible.
- Review investment performance – are investments providing expected returns and adequate diversification, and meeting your state objectives?
- An evaluation of your retirement plan – are employer-sponsored retirement plans being fully utilized? Should you continue to fund an IRA? If self-employed, should you start a self-employed retirement plan?
- Review of estate plan – do changes in family situation indicate an updating of wills or trusts is necessary? Are investments and property registered properly? Are beneficiary designations on life insurance and retirement plans correct?
Taking the time for periodic financial “tune-ups” can improve the reliability of your plan and provide the peace of mind that you are still heading towards your planned destination.
Do you need help developing a financial plan or do you have questions about your current financial plan? Send us a question in the Have a Question box below.