Instead of hauling out those familiar New Year's resolutions about eating less and exercising more, how about focusing on something that's also very good for you in the long run -- and even sooner. We're talking about your financial plan -- your fiscal health, if you will. The first part of a new year is a great time to review your plan and make whatever revisions might be indicated. With that in mind, here are five suggested resolutions that, if followed, will go a long way toward helping to ensure that your later years will be financially secure.
- Get your balance sheet in order
You can't realistically expect to reach a goal without knowing where you're starting from. Using Dec. 31, 2018, as the effective date, update your personal balance sheet (assets versus liabilities, broadly speaking). Everything else really proceeds from this, so take the time to bring all the numbers up to date.
- Review your budget and spending habits
How close did you come to what you had planned to spend last year? Where did you go off-track and what can you do about that? Has something fundamental changed in your life that affected your expenses, and is that a one-time item or an ongoing cost? Where can you trim expenses? Although some budget items are fixed, a sharp pencil can produce significant savings on other costs.
- Designate and update your beneficiaries
If you don't correctly document and update your beneficiary designations, who gets what may be determined not according to your wishes, but by federal or state law, or by the default plan document used in your retirement accounts. This is especially important if something has changed in your life that could affect your beneficiaries or heirs, such as divorce, remarriage, births, deaths or your state of residence.
- Revisit your portfolio's asset allocation
The ups and downs of the markets will affect your asset allocation over time. Appreciation in one asset class or underperformance in another can leave your portfolio with an asset allocation and risk profile that differs from what you originally intended. It's important to revisit both your current and ideal asset allocation at least annually and rebalance as needed.
Asset allocation does not guarantee a profit nor protect against loss. The process of rebalancing may result in tax consequences.
- Check to see if your retirement plan is on track
Many investors have delayed their retirement plans for various reasons. The important thing is to respond and determine -- promptly and realistically -- what changes might be needed given your current lifestyle and market environment. In evaluating the current state of your plan, don't fixate solely on a number -- "We'll be fine when our retirement portfolio is worth $X" -- that just isn't the way retirement works anymore, if it ever did. The truth is that retirement has a lot of moving parts that must be monitored and managed on an ongoing basis.
Since we all know that many New Year's resolutions don't survive that long, resolve to really follow through on these!
This material was created by Raymond James for use by its financial advisers. Submitted by Beckie Comstock, Comstock Private Wealth Management. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Comstock Private Wealth Management is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc. Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC.