Get Fiscally Fit: Year-End Checklist Part 1

It’s that time of year again – time to count our blessings, spend time with our families and commit to hopping on the treadmill. But as you wrap up 2012, consider getting fiscally fit too! We want to help you make 2013 a successful and prosperous year, so we put together a checklist with pointers for wrapping up 2012 and getting a head start on the new year. Just a little time and preparation can help you spend more time with your family this holiday season and less worrying about your finances.

1. Retirement Account Review

Take a look at all retirement accounts, specifically to see if the beneficiaries are correct and current. Generally we recommend contributing as much to your retirement plans as possible/practical, whether it is a ROTH IRA, Traditional IRA or 401k plan. Also check to see if the retirement accounts are reinvesting the dividends to keep your accounts growing. This is a good time to see how the funds are allocated and diversified; if they’re not, consider shuffling some things around.

2. Taxable Account Review

Similar to the review of your retirement accounts, look for balance, diversification and reinvestment of dividends. Generally speaking, a capital gain taken this year (tax year 2012) will likely be taxed less than next year. However, your decision to sell an investment should not be based only on taxes but also future potential. Don’t let taxes be your only reason for exiting a particular investment.

3. Insurance Review

Year-end is a good time to review the many types of insurance policies you own – from life insurance, annuities, and disability insurance to homeowners and long-term care insurance. It’s a good time to ask “what-if” type questions.

Also check the policies that have beneficiaries – are they correct?

4. What about a will?

Do you have one? Has it been updated lately? If not, update it. Review the existing will for accuracy and alignment with your wishes. If you don’t have a will, try and start the process before year-end. Another consideration: put together a healthcare power of attorney – it could come in handy one day.

5. Budgeting and Tracking of Expenses

Prepare a realistic annual budget and track spending throughout the year. It’s a crucial step to optimizing income and saving more each year. More on this in next week’s list!

6. Prepare a Financial Snapshot

Now is an excellent time to summarize assets and liabilities. Compare this year’s position with the past years’ and note any new progress toward long-term goals.

7. Minimize Debt

Debt reduction/elimination never goes out of season. If possible, pay down some debt and start 2013 with a clean slate.

8. Review your Credit Score

Each year you can review your credit scores from the 3 major credit scoring agencies at AnnualCreditReport.com. It is the only authorized source for the free annual credit report that is yours by law. Look for any unusual activity or errors.

9. Get Organized for 2012 Taxes

Continue to accumulate documentation for tax year 2012 in a folder including amounts of estimated tax payments made and the dates of payment, closing statements for any refinance or new home purchases. Also cost basis information for investment sales.

10. Charitable Giving

Many clients focus attention on charitable giving this time of the year. Pick a favorite charity or organization and make a donation! If you itemize deductions you may do some good and reduce your taxable income as well.

There are many more things to review this time of year, but a little attention to your finances can go along way to making 2013 a happy and prosperous year. If you have any questions please don’t hesitate to contact us.

Greg Horstman

For the past 28 years, Greg has worked to provide clients with exceptional financial advice and strategic investment strategies. In the summer of 2009 he partnered with Craig and joined Prosperion Financial Advisors. His service and personal dedication to clients is second to none. Learn more about Greg here.

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

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