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Protect Your Future with a Yearly Wealth Checkup

December 11, 2017

Your financial security might be vulnerable to life’s constant changes, but an annual review of your retirement plan can help safeguard your money—and your future. 

Wealth planning is an ongoing, fluid exercise that should be revisited annually with your financial advisor. Start the conversation today in these key areas.

Plan Contributions. Review your 401(k) or IRA to ensure you make the maximum allowable contributions. If you’re over 50, you may be eligible for additional catch-up contributions over the maximum.  

Required Minimum Distributions (RMDs). IRS penalties for not taking distributions on certain accounts are steep: 50% of the required amount. Make sure you’re on track to withdraw these mandatory disbursements, and use the opportunity to identify stray retirement accounts for consolidation.

Beneficiaries. Marriage, divorce, and having kids are just a few of the ways your priorities might change. Update declared beneficiaries and consider converting a non-retirement IRA into a “Stretch IRA,” ensuring that the tax-deferred income benefits extend to future generations.

Gifting.  Reduce tax burden by taking advantage of annual gifting opportunities. A 529 allows you to save for a loved one’s college tuition, and the assets are not factored in determining federal financial aid for the elderly. With some stipulations, a special exclusion allows five years’ worth of gifts—up to $70,000 or $140,000 for married couples—to be contributed at once. 

Portfolio Balance. Group your investments into taxable, tax-deferred, and tax-free categories. This exercise might reveal you’re over-invested in one area, namely traditional, tax-deferred retirement accounts. You may benefit from increasing your allocations to tax-free vehicles by investing in municipal bonds or by converting an account to a Roth IRA

What’s Your “Exit Strategy” for Retirement?

Plan for a smooth transition to retirement with these three exit strategies:

> Consider both your dream retirement and the projected value of your portfolio to develop a realistic retirement budget. What needs to happen to make that vision a reality?

> Take advantage of your Social Security benefits by working until your full retirement age, which varies based on your birth year. 

> Pay off your debt so that your funds can go towards your lifestyle instead of fees and penalties.