Annual financial planning topics evolve as you age. We believe that once you secure your retirement, or when you’re close to it, you should consider the following: 

5 Annual Financial Planning Topics 

1. Tax Planning 

Why would you be doing your tax planning in September, October, or November? Several of the following strategies need to be employed before December 31, so if you wait until your tax return is being prepared around March or April of the next year, it will be too late.  

We recommend: 

• Conducting a review of your earned income 
• Confirming distribution amounts from your IRA or 401(k) 
• Identifying any interest and capital gains you may have received in taxable accounts 

In the years you have lower income than what you expect in the future, we recommend thinking about Roth conversions. Although you will likely pay more taxes in the year you convert to Roth, the ultimate goal with all tax planning strategies is to minimize lifetime taxation. 

On the flipside, if you are expecting an influx of income in the future, you can plan ahead to minimize your tax liability by considering the following strategies: 

• Tax loss harvesting, which is selling securities at a loss to offset capital gains from securities sold at a profit in the same year.  
• Qualified Charitable Distributions (QCD) or other charitable giving and donor-advised funds 
• Verifying that you’re withholding a satisfactory amount of taxes on earned income and any retirement account distributions 

Everyone must pay their dues, but if you take strategic steps today, you can lower your tax burden to ensure that you’re not paying a dime more than you owe. 

2. Required Minimum Distributions (RMDs) 

IRA contributions are typically tax deductible, meaning the contributor does not pay tax on those amounts. Instead, taxes are owed on distributions. Once the IRA account owner reaches a certain age, the IRS imposes required minimum distributions (RMDs) to ensure the taxes are eventually paid rather than allowing the owner to indefinitely defer their tax liability.  

Your RMD start age depends on the year you were born. The age for these distributions was 70-and-a-half, and then the law changed to 72, and then 73. Some individuals will need to begin RMDs at 75. The IRS can assess a very hefty penalty if you miss your RMD. If you are charitably inclined, a QCD from your IRA will satisfy your RMD. We have a great article on this topic: How Do Required Minimum Distributions and QCDs Work?  

3. Medicare and Healthcare Planning 

Open enrollment happens in the last quarter of the year, somewhere at the beginning of October. You can move plans at this time without any underwriting. Everyone should look at: 

• What their plan includes 
• Options to change plans 
• Coverage you may need added 

Everyone is different, and most people end up not changing their plans. However, it is still a good idea to review your plan around the last quarter, because if changes need to be made, open enrollment is the opportune time to do so. 

Note: We can put you in contact with some of our partners who specialize in Medicare and healthcare planning. You may even be able to switch to an identical plan at another provider and pay lower premiums, which is always a great way to secure your retirement. 

4. Year-end Investment Review 

If you’ve been looking at your investments throughout the year, you know that your portfolio has gone up and down quite a bit. However, you might overlook a few things and really need to perform a year-end investment review. What is a year-end investment review? 

It’s an annual best practice to consider: 

• Portfolio risk 
• Tax loss harvesting 
• Adjusting your allocations 

You may want to rebalance your portfolio, depending on how one stock performs compared to others. Perhaps one stock is responsible for 60% of your gains. Unfortunately, this is a major risk that needs rebalancing because you risk the stock falling and your portfolio struggling as a result. 

Additionally, you may be at the point in your retirement planning where you’re close to leaving your job and have enough money to live the life you want, but you have too much risk. Bonds, annuities, or other financial vehicles may need to make up more of your retirement strategy at this time. 

Different age groups have differing risk tolerances. 

Your risk tolerance at 50 will be much different than when you’re 60, and so on. Changes can be made based on how the markets performed, how the economy is doing and your feelings going into the coming year. 

5. Estate Planning Update 

Clients often drag their feet when it comes to estate planning because it’s a topic no one wants to think about. However, if you make it a routine, you will be sure that these documents are 100% in order and accurate. 

You want to be sure that: 

• Every document is up to date 
• Beneficiaries (and their information) are up to date 

Often, people come into our office, and they haven’t updated their plan in 10 years. Time goes by so fast, and if any major changes aren’t put down on paper, you may leave money or assets to someone who is no longer in your life. 

Beneficiaries may be incorrect or no longer with us, and these documents are final once executed. A simple review is worth your peace of mind that all the hard work and energy that you put into retirement planning will help the individuals that you love when you pass on. 

An annual update is a check and balance that your estate plan is in order. 

If you check all these items off in September or October, you can go into the coming year knowing that you have your retirement plan in order. 

Want to discuss any of these topics more? Schedule a call with us and we’ll do our best to help you.