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Give Yourself a Financial Checkup

Just like you go to the doctor and the dentist regularly for a checkup, it’s also a good idea to give yourself a regular financial checkup. While you still might have 15+ years until retirement, you're not a kid anymore either. It's probably time to take a hard look at your financial situation and make some adjustments for the future. In analyzing your finances, consider your answers to these key questions:

1. Will your retirement savings be adequate? Are you likely to have enough money to live comfortably when the time comes? Are you saving enough each month? There are many online financial calculators that will enable you to determine if you're on track.

  • A good rule to follow is to plan for 80% of the income you had before retirement. Most people are satisfied and comfortable with this income level during retirement.

2. How diversified are your investments? Diversification is important, primarily because it limits the amount of money you can lose. It also maximizes your earnings. For example, when your stocks are doing poorly, bond-related investments tend to do well and vice versa. Precious metals tend to do well in periods of high inflation.

3. Are you maximizing your profits with tax deferred accounts? Certain types of investments create a larger tax burden than others. It makes sense to be sure that the investments that will be taxed at higher rates are in tax-deferred accounts like your 401(k) and IRA.

  • As a general rule, stocks held for over a year are taxed at the capital gains rate. Short-term stock trades and bond interest are taxed as income.

  • Studies have shown the allocating your assets into the proper accounts can affect the value of your holdings by 10% over a period of 10 years, creating a significant difference in the value of your retirement savings.

4. Can you reduce your debt level? Debt can eat away at your ability to retire as well as your sense of well-being. It’s important to know how much you owe and the interest rates you're paying so you can make a plan for paying off your debt in the shortest amount of time that’s feasible for you.

  • Debt effectively reduces your income; it's like a long-term pay cut.

5. Is your estate planning up to date? Do you have a will that takes into account your current situation? Do you have a durable power of attorney or a health proxy set up? Are the beneficiaries for your retirement accounts named properly?

  • These are just a few things you should consider. No one likes to think about this stuff, but these details are critical for you and your loved ones. Speak to your attorney as needed.

6. Is your insurance sufficient for your current needs? Do you have enough insurance? Are your policies up to date? At a minimum, take a look at your life, health, homeowners, disability, and liability policies to be certain they’re adequate.

  • Contact an insurance professional if you’re uncertain about your coverage.

Give yourself a financial checkup so you can be sure you're on the right track. It's the smart and responsible thing to do. Once a year, sit down and look over everything. Simply make the necessary adjustments and create a plan to improve your current financial situation. You’ll be glad you did!

To Your Continued Success!

Always Leading Up,


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