5 Financial Tips For New Year

Many people are hoping to start 2012 on the right foot financially.  I was interviewed by Eric Perkins on KARE11 Saturday on how the following five financial tips can give you the right start in the new year.  I hope you can benefit from these tips from the Secured Retirement Advisors office.

Tip 1: Make a financial plan and revisit it often
- A plan should focus on your goal and desires and include investments, taxes and income planning.
- Work with a financial professional that is plan focused, not product based.
- Rebalance your portfolio, identify your risk exposure and make sure it fits into your risk tolerance and financial plan.

-Consider your financial stage in life. Are you still in your accumulation years with time prior to retirement? Or are you now in a situation where you are starting to take your investments back as income? A market correction can be an opportunity for someone in their earning years but a disaster for someone in or near retirement.

Tip 2: Get out of debt
- Make sure you are paying off your credit card debt and chipping away at your student loans.
- Create a budget and stick to it.
- Set aside an emergency reserve so unexpected expenses or a job loss won't derail your financial plan.

Tip 3: Maximize your benefits
- Make contributions to a 401(k) employer match and Flex Spending Accounts.

- If near retirement, meet with financial professional who understands how you can coordinate your social security benefits and your spouse’s social security benefits which could substantially increase your lifetime income.  I’ve worked with families who have been able to gain an extra few thousand dollars a month once they learned how to use their social security benefits correctly.

Tip 4: Get estate documents in order
- Update your will. If you have dependents, you need to have current legal documents.
- Update your beneficiary forms for retirement accounts, annuities, and life insurance. These assets will typically pass outside your estate documents and need to be updated regularly. It’s surprising how often beneficiaries are cut out or end up with unnecessary legal expenses due to poor planning in this area.

Tip 5: Take advantage of low tax rates
- Consider a "look forward" tax review.  Most families fail to coordinate their tax planning with their investments. They make financial decisions throughout the year and only find out once it’s too late how these decisions impact their tax returns.
-Visit with a financial professional that can run some simple analysis to see if Roth IRA or other tax free financial tools are worth paying at a lower tax today to avoid higher taxes in the future.  Also, consider locking in capital gains before tax rates jump significantly.