End-of-year financial checklist: 10 moves for getting your financial house in order


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Black Friday and the endless onslaught of gift-buying and over-spending are only a few weeks away. These last days of (relative) quiet before the holidays are a good time for us to pour a good cup of coffee and look at our finances before the New Year. Here are ten steps that can help us get our financial houses in order.

1. Review your 2016 spending
Hopefully, you already have a budget tracking system on your computer, on paper, or, better yet, are using one of the well-regarded online personal finance programs. The website Top Ten Reviews has an excellent review of personal finance software that costs anywhere from $39.95 to $95. If not, November is a good time to look into those tools to ensure you realize the most benefit from your financial resources.

2. Structure a budget for 2017
As we get older our spending needs shift. Housing becomes our largest expense. We spend less on clothes and transportation. Contributions to pensions and Social Security decline as they are usually linked to working. On the other hand, healthcare spending increases. So budgeting becomes ever more important. Fortunately, it is easier than ever.
User-friendly online tools can help consolidate and calculate finances, and spur us on to achieve our financial goals. We find the review of five budgeting templates posted on The Huffington Post useful in determining which product is best for the way we live and work.
Although budgeting isn’t difficult, a 2013 Gallup poll reported that only about one-third of Americans do so regularly.

3. Check and rebalance your investment portfolio
Do you have the right balance of stocks, bonds, cash, and alternatives in your retirement portfolio? If you have not looked within the past 6 months add a portfolio checkup to your end of year list. With market swings and changes in asset values it’s important to ensure you are protected. That will mean different things to different people. The article, “The Proper Asset Allocation Of Stocks And Bonds By Age,” on FinancialSamurai.com offers several asset allocation scenarios that can help with your assessment.
For example, conventional models recommend a portfolio allocation for a 65 year old of 35 percent stocks, 65 percent bonds. But as Financial Samurai notes, there are multiple factors to take into consideration before deciding on your optimal asset allocation, such as:

•  What is my risk tolerance on a scale of 0-10?
•  If my portfolio dropped 50% in one year, will I be financially OK?
•  How many income streams do I have?
•  Where do I get my investment advice and what is the quality of such advice?

More insight is available on financialsamurai.com, but it is always advisable to seek out the help of a qualified financial professional.

4. Determine your required minimum distribution
If you are 70 ½ or older and have money in a 401(k) or traditional IRA, you may need to take a “required minimum distribution” (RMD) by the end of the year. The initial withdrawal can be deferred until April 1 in the year following the year you turn 70 1/2 But subsequent withdrawals must be made annually by Dec. 31. Not complying carries a stiff penalty. Charles Schwab’s online RMD calculator can help determine the amount of your RMD based on your age, your account balance, your beneficiary, and other factors.
Opinion varies on how much to pull out of your account each year. Investment company Vanguard, suggests making withdrawals between 3% to 5% at the beginning of retirement and adjust according to changes in market conditions. An article on Time.com, “Forget the 4% Withdrawal Rule,” is a good place to get an overview.

5. Request your final credit report for 2016
When it comes to your credit history, what you don’t know can hurt you. Everyone is entitled to receive three free credit reports every 12 months — one each from Equifax, Experian and TransUnion. Yet only about 60 percent of adults check their credit reports, according to an American Bankers Association study in 2015. One strategy is to request a report at three different times of the year, one from each agency, so that you can catch any errors or omissions. It is equally important to check your report for suspicious activity that could point to identity theft.

6. Declutter and donate to charity
We feel great when the closets are emptied and the pile of things we’ll never wear or use again grows. Even better when they can be donated to help people less fortunate–and can be claimed as a write-off on our income taxes. If you itemize deductions on your tax return, donating to a charity before December 31 can help lower your 2016 tax bill.
Sites such as GuideStar, CharityWatch and Charity Navigator can help you decide where to donate to make the greatest impact.

7. Review insurance coverage
Housing, car, personal property, life and health insurance. Do you have the right plans for the life you lead now? Check with two or three agents representing highly rated insurers to assess the adequacy and pricing of your policies. If you’ve had a major life or financial event – marriage, divorce, new home – make sure your coverage is accurate. And if you have considerable assets that go beyond what your home and car insurance cover, look into getting an umbrella policy.

8. If you can, max out your retirement contributions
If you are still working, or find a large bag of money under your mattress one morning, sock some of that money away in a 401(k), IRA or other retirement account before the end of the year. If you can, make the maximum contribution to reduce the income you’ll pay tax on next year—up to $24,000. That’s a potential $6,000 tax savings if you’re in the 25% tax bracket.
Those who are self-employed can contribute up to $53,000 or 25% of eligible income, whichever is less, to a SEP-IRA.

9. Review your social security and retirement plans
Twenty-nine percent of women who responded to Transamerica’s annual survey expect Social Security to be their primary source of retirement income. Even if you have other resources, it’s a good time set up your own “my Social Security account.” The site will give you an estimate of your future Social Security benefits and a record of your lifetime earnings history. There are online services to help you decide when to claim Social Security, including Social Security’s retirement estimator and AARP’s Social Security calculator.

10. Don’t have a retirement plan yet? Start one now.
Check out the Employee Benefit Research Institute’s site, choosetosave.org , and its “The Ballpark E$timate” online calculator. Many major mutual fund companies also have good retirement calculators on their sites.
There are many free online financial tools that will help you get a better handle on your finances going forward. One excellent resource is Practical Money Skills.
Or consider signing on with a proven (read: trustworthy) financial advisor. A professional will be able to answer your questions and bring knowledge and experience to managing your finances. For unbiased guidance, look for a fee-only planner who is a Certified Financial Planner. You can find one by visiting the sites of The National Association of Personal Financial Advisors, The Financial Planning Association and The Certified Financial Planner Board of Standards.


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