Financial Assessment Time: An Expert's Insight into Adjusting Your Financial Navigation System
Mid-Year Financial Check-Up: Essential Tips for a Secure Retirement
As we pass the midpoint of the year, it's a perfect time to review and realign your financial plans, particularly if you're nearing retirement. Here are some key strategies to consider:
Update Your Holistic Net Worth
Compile a current, centralized list of all assets and liabilities. Check if your asset allocation has drifted significantly from your retirement goals and rebalance accordingly, emphasizing a suitable time horizon and risk tolerance.
Use Your Tax Return as a Planning Tool
Analyse your most recent tax return for missed opportunities such as maxing out retirement contributions, catch-up contributions, or optimising withholding. Consider Roth conversions if your income will be lower, to lock in lower tax rates on future growth.
Stress-Test Insurance and Estate Plans
Confirm that insurance coverage still aligns with your risks and update estate documents to reflect your current wishes. Coordinate estate planning with tax and investment strategies to protect your legacy and reduce liabilities.
Recalibrate Your Investment Strategy
Shift your investment mix gradually towards income and capital preservation rather than growth. Sequence withdrawals strategically to minimise tax impact and sustain income throughout retirement.
Plan Charitable Giving Intentionally
Consider tax-efficient methods like gifting appreciated stock, qualified charitable distributions (QCDs) from IRAs if over 70½, donor-advised funds (DAFs), or charitable gift annuities. Align giving with your values to create a purposeful legacy while managing taxes.
Prepare for Medical Expenses
Anticipate and budget for increasing healthcare costs, including insurance premiums, out-of-pocket costs, and long-term care. Confirm coverage adequacy and consider supplemental insurance or Health Savings Accounts (HSAs) if applicable.
This comprehensive realignment serves to ensure your financial plan supports your lifestyle, legacy goals, and risk tolerance as you enter retirement. Regular reviews—ideally annually—are important to adapt to changing circumstances.
For more guidance, consider seeking advice from financial advisers, business owners, and experts such as professional wealth managers, fiduciary financial planners, CPAs, and lawyers. The Kiplinger Building Wealth program provides access to such professionals who share retirement, estate planning, and tax strategies.
- To effectively manage your personal-finance and secure retirement, consider recalibrating your investing strategy, evenly shifting your investment mix towards income and capital preservation as you approach retirement.
- While preparing for medical expenses in your personal-finance planning, be sure to anticipate and budget for increasing healthcare costs, such as insurance premiums, out-of-pocket costs, and potential long-term care expenses.
