Financial Planning Actions to Take Before the New Year

By
Mike Loo, MBA
September 12, 2018
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Before the year’s end, in the midst of the holiday events, travel, and overall busyness, the last thing you want to think about is tackling your finances. But considering how finance-related resolutions are the third most popular New Year’s resolution, why don’t you give yourself a head start on next year’s financial goals by finishing this year strong? Here are ten critical financial actions you’ll be glad you took when the ball drops on New Year’s Eve!

  1. Amp Up Your Retirement Savings

If possible, max out your contributions to your 401(k) by the end of the year to make the most of your retirement savings. For 2018, you can contribute as much as $18,500 (or $24,500 if you are age 50 or older). You might also consider contributing to a Roth IRA. For 2018, you can contribute as much as $5,500 (or $6,500 if you are age 50 or older). Keep in mind that if your income is over $199,000 and you’re married filing jointly, you won’t be eligible to contribute to a Roth IRA.

  1. Use Your Medical And Dental Benefits

Did you have good intentions of taking care of some dental work, blood tests, or other medical procedures? Now’s the time to take advantage of all your healthcare needs before your deductible resets. Dental plans in particular often have a maximum coverage amount. If you haven’t used up the full amount and anticipate any treatments, make an appointment before December 31st.

  1. Verify Expiring Sick And Vacation Time

Depending on your company, your sick or vacation time might expire at the end of the year. Check with your HR department to learn about any expiration dates. If your sick or vacation time does expire, fit in a last-minute vacation, a staycation, or trips to the doctor to use up these benefits.

  1. Use Your Flexible Spending Account

Like your health insurance benefits, you’ll want to use up your FSA (Flexible Spending Account) dollars by the end of the year. Your benefits won’t carry over and you’ll lose any unspent money in your account. Check the restrictions for your account to see what the money can and cannot be used for.

  1. Double-Check RMDs

If you’re retired, review your retirement accounts’ required minimum distributions (RMDs). An RMD is the annual payout savers must take from their retirement accounts, including 401(k)s, SIMPLE IRAs, SEP IRAs, and traditional IRAs, when they turn 70½. If you don’t, you may face the steep penalty of 50% of the distribution you should have taken. To calculate your RMD, use one of the IRS worksheets.

  1. Stay On Top Of Charitable Contributions

If you made a charitable contribution in 2018, you might be able to lower your total tax bill when you file early next year. It can be especially advantageous if you donated appreciated securities to avoid paying taxes on the gains. Along with your other tax documents, find and organize any receipts you have from your donations to charities, whether it was a cash, securities contribution, or another type of gift.

  1. Review Your Insurance Coverages

A lot can happen in a year. As you experience life changes, from the birth of a child to marriage to a new career, it’s important to regularly review your insurance coverages and your designated beneficiaries. Now is the ideal time to review your current insurance policies and make sure they are up to date. You might also want to evaluate your need for other types of insurance you may not currently have, such as long-term care insurance.

  1. Prepare For A Market Correction

We are currently in the longest bull market in history2 and the stock market just keeps hitting record highs3. But we know that what comes up must eventually come down. Prepare yourself and your money by sticking to a long-term strategy, rebalancing your portfolio, and keeping your emotions in check. As long as you are following sound investment principles, only investing long-term money, and keeping your assets within your risk tolerance, you should have no reason to panic when we experience a market downturn.

  1. Talk To Your Kids About Money

The holidays are usually a time for families to get together and reconnect. Use this time intentionally by talking with your kids about money. No matter how old they are, you can give them sound wisdom that will set them up for success. Make sure they understand the importance of saving for retirement and having the proper amount of insurance coverage. Another way to help your kids financially is to create an estate plan to make sure you leave a legacy and avoid passing down a significant tax burden or legal headaches to your kids. If you’ve already taken the time and energy to create an estate plan, you’ll want to check in periodically to ensure all the documents are up to date and no major details have changed.

  1. Give Without Gift Tax Consequences

It’s never too early to start planning for the legacy you want to leave your loved ones without sharing a good portion of it with Uncle Sam. You may want to consider gifting. Each year you can gift up to $14,000 to as many people as you wish without those gifts counting against your lifetime exemption of $5 million. If you’ve yet to gift this year or haven’t reached $14,000, consider gifting to your children or grandchildren by December 31st.

  1. http://www.statisticbrain.com/new-years-resolution-statistics/
  2. https://www.cnbc.com/2018/08/22/longest-bull-market-since-world-war-ii-likely-to-go-on-because-us-is-best-game-in-town.html
  3. https://www.usatoday.com/story/money/2018/08/21/stocks-hit-record-highs/922315002/

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By
Keegan Tanghe, AIF®
November 7, 2017

Don’t we all just love the holidays? Having a nice, large Thanksgiving meal with close family and friends? Unwrapping presents during Christmas or Hanukkah, seeing the big smiles on the young kids and grandkids as they rip open that favorite toy they begged for? It may be pure bliss during the months of November and December, but come January and February, when those credit card statements come in, the stress starts to set in.

According to the article here,   the average person takes more than five months to pay off that holiday debt. Many more carry that into the next holiday season, hence carrying it indefinitely and having it snowball out of control. Many people just make the minimum payment on credit cards throughout the year, and then when the holidays come about, go crazy with buying up everything, their balance goes up, and so does that minimum payment, which they soon cannot afford to pay. Defaults on credit cards and people trying to do balance transfers or debt consolidation soon become the norm and the house of cards (literally) soon falls.

44% of people surveyed stated that they were stressed out because of that extra holiday debt. Among all age groups, Millennials were most likely to go into debt around the holidays. People ages 24-35 were most likely to say they went into debt this holiday season with a rate of 14.3%. With the exception of 45-54-year-olds, the likelihood of going into debt decreased with age. Seniors were least likely to say they went into debt, with a rate of 7.6%.

So how can we mitigate or eliminate this holiday debt altogether?

Start a holiday-saving account: Set aside a holiday or Christmas budget at the beginning of each year! The problem that many people run into is that they do not set a holiday season budget and just spend, spend, spend. We have many clients who save anywhere from $50-200/month starting in January, so that they have their full budget come the 4th quarter. Or, if you are out shopping throughout the year and see a great sale on something that a family member or close friend would like, feel free to buy it, to pace yourself. If it’s within the budget, you should be ok.

Change your tax withholdings: It’s also a proven fact that many people over-pay their taxes throughout the year, over-withholding on their paychecks. The average person pays their amount of taxes by the spring or summertime, and the rest of the year is just spent paying more to Uncle Sam, lining his pockets. We have had many clients who come through our office in the 3rd or 4th quarter, and after we look at their tax returns for the previous year, as long as everything is a constant, we ascertain that they have already paid all of their taxes for the year. They can then increase their withholdings on their paycheck, thus bringing in more income monthly, to allow them to pay for the holiday’s cash. Solution: no post-holiday blues. Then, come January, we would review the client’s situation again, many times working alongside their CPA, to help them get to more of a point of breaking even or getting just a small tax refund back at tax time. This would allow them to better plan out their budget for the year.

Can you change your schedule: Other things to consider to have a credit card-free holiday is to work overtime, if your job allows it, or if you get a bonus throughout the year, to set that aside for the holiday season. But don’t count on it, as you can’t always rely on bonuses, commissions, or pay raises to occur when you want them to.

If you are a people-person and don’t mind strangers in your car, consider driving for Lyft or Uber. I believe they offer tiered bonuses if you complete a certain amount of rides during your first 30 days of working and always have promotions going on. That’s an instant quick bonus for one or two months of work. Many retailers, as well as Amazon, hire hundreds or thousands of seasonal part-timers, to help with the holiday rush. Maybe you can even use that employee discount at that retail store you’d be working at to get a good deal on some presents. UPS and FedEx also hire extra drivers and warehouse employees to sort through all of those packages that are being delivered the last two months of the year.

Conclusion: Get creative and don’t get complacent. You can do this!

Action items:

Understand where your money actually went.

There are many great apps out there which can track your spending throughout the year, and help you stay up on things, so things don’t spiral out of control

Set a realistic budget of what you will spend on family, friends, co-workers, and even clients, if it merits it in your situation, so you don’t break the bank

Work with a trusted financial advisor/coach that can hold you accountable on your spending, so you can keep pace to reach your financial goals

Good luck and let us know your progress!  Enjoy the holidays and create some lifetime memories!

[1] http://www.magnifymoney.com/blog/featured/americans-holiday-debt-added-1003-average-year/

By
David McDonough
March 28, 2023

Financial planning involves thoughtfully outlining objectives and setting goals in your Life Plan. With anything, the possibility of running into obstacles, options, and challenges throughout your financial journey is unavoidable. That’s why it is important to implement some sort of checks and balances to mitigate these challenges. Insurance is one of the best ways to account for unforeseen conditions and events in your financial plan. The thought of utilizing insurance can be daunting. It makes the possibility of losing your car or home due to an accident, flood, or fire a reality. That’s exactly why we create a financial plan – to be prepared for the unexpected. Our team is committed to coaching you through the process, so that you can make an informed and confident decision. There are various types of insurance services available that your Trilogy Financial advisor can help you navigate so you can handle the many uncertainties that life throws your way.

Read on to discover these insurance services.

Insurance Services Provided by Trilogy Financial

Every Trilogy Financial Advisor is committed to helping you build the legacy you have always desired to leave through the following services:

Term Insurance

A term insurance policy is the most common form of temporary life insurance. The term usually lasts for a specific “term” of years. Term insurance is also a form of insurance that is rented. Meaning, you pay a monthly premium for the insurance, but it expires after the allotted time frame. The duration can range from five to thirty years.

Term insurance protects liabilities that will cease to exist after a specific period, such as providing extra cashflow for raising children. It is a simple life insurance plan that protects against the possibility of an untimely death. A death benefit is granted if the insured passes away during the policy's stated tenure.

Because death is unpredictable, term insurance plans are essential. The family may experience a significant financial loss if the family's primary provider passes away. A term plan covers the loss. It benefits the family, allowing them to cover lifestyle costs and continue to address their financial objectives.

Permanent Insurance

Permanent insurance can be considered “owning” insurance coverage. Like term insurance, you pay a monthly premium; however, in permanent insurance, the range is continuous and does not end within a time frame.

For instance, even after your children have moved out and your liabilities have diminished, you may continue to carry some form of insurance to cover your loved ones and compensate for your end-of-life needs.

Permanent insurance premiums are more significant than term insurance premiums because, unlike term insurance, the insurance company may never have to pay out the policy. Permanent insurance can be used as an income and an insurance tool. Both a death benefit and a cash value factor are included. You can access the money as the value increases by taking out a loan or a withdrawal, and you can terminate the insurance by withdrawing the cash value.

Long-Term Care Planning

Long-term care planning, at its foundation, entails ensuring that you or a loved one's needs are adequately met when they can no longer care for themselves. Therefore, as you age, having a practical plan becomes more and more crucial. While many maintain their independence well into their senior years, it never hurts to plan.

Any long-term financial plan should consider long-term care costs, especially if you are in your 50s or older. You are unlikely to qualify for long-term care insurance if you already have a disabling condition. Most over 75 applicants will not be accepted by long-term care insurance providers. Most persons who purchase long-term care insurance do so between 50 and 60.

Risk Management

Risk management entails recognizing, assessing and managing risk. A well-executed risk management program is built on a foundation of standardized risk assessments to assist businesses in prioritizing their risk based on its potential impact. This procedure will inevitably reveal hazards affecting the company's fundamental competencies.

As financial Advisors, it is a part of our job to help you navigate your financial well-being, which includes helping you mitigating certain risks. Identifying your risk factors is your first defense, followed by avoiding or limiting risks to your income and survivors. Insurance is your quality line of defense.

Importance of Insurance in Financial Planning

Here are some factors that make insurance an essential aspect of your Life Plan:

  • Financial assurance: You feel safe knowing that the insurance policy will cover the damages in the event of an emergency.
  • Tax advantages: Insurance lowers your taxable income and provides financial benefits.1
  • Risk protection: Insurance prepares you to deal with any financial loss you might suffer in the event of an unplanned circumstance.
  • Meeting your prerequisites: Several insurance policies are available to cover the various risks you can encounter.
  • Peace of mind: Insurance plans assure you that your funds will not be compromised in the event of an emergency.

*This information is not intended as authoritative guidance or tax advice.  You should consult with your tax advisor for guidance on your specific situation.

Why Choose Trilogy Financial

Your financial plan should be strategically in line with your insurance. Our Trilogy Financial Advisors use a comprehensive strategy to offer insurance policies tailored to your specific needs and Life Plan. We understand the risks you face and how to help improve your financial life. Our Advisors will work with you to develop a deeper understanding of your alternatives, pinpoint practical needs and make plans for the care you and your family deserve.

To help you build the life you’ve dreamed, we collaborate with the most reliable insurance firms with a track record of being financial secure and capable of paying claims.

Get Started with a Financial Advisor Today

Everyone has a distinct level of risk, and before purchasing insurance, it is critical to identify risks and establish how to limit the likelihood of them occurring. We understand that everyone has a varying level of comfort and experience in navigating finances and Life Plans. That’s why our Advisors are committed to being both a partner and coach to support you as much or as little as you need, so you can make the best decisions for you and your family.

At Trilogy Financial, our Advisors will guide you through your daily financial decisions to keep you on track and set you up for your real-life goals. If you have any questions concerning insurance or any other element of your financial life, get in touch or visit our website today to book a meeting with an advisor

 

happily discussing insurance plan after meeting with financial advisor
 

 

Get Started on Your Financial Life Plan Today