Make Time To Review Your Financial Plan This SummerSubmitted by North Main Financial Group, LLC on July 5th, 2019
It’s hard to believe the year is already half over! Kids are out of school and days are filled with sunshine, lake days and plenty of sunscreen. Now, if you are like me, there isn’t much difference between June and January when it comes to work and your day-to-day routine but you may be taking that long-awaited vacation, spending extra time with your kids or grandkids, and enjoying the sunshine a little bit more. In between your summer fun, now is a great time to review your financial plan and make sure you are still on track to reach your goals.
Here at North Main Financial, we encourage clients to evaluate their financial plans at least once if not twice a year. As you move through life, things change. Things like kids, marriage, divorce, death, and job changes, are all things that can affect your financial planning. We’ve developed a quick summer checklist to ensure that the various parts of your financial plan continue to be in place in the ways that you desire. While this isn’t a catch-all, it does provide a few high points to consider when reviewing your financial plan.
Let’s dive into our three-point sermon…
Review of your beneficiaries and planning documents.
One of the easiest things you can do when it comes to reviewing your financial plan is to review beneficiary designations. Here at North Main Financial we often see clients who haven’t reviewed their beneficiaries in years, if ever, and they’ve gone through significant life changes. We recently reviewed a client’s financial plan who had been widowed for several years. We discovered that her deceased husband was still listed as the beneficiary on many documents. This would have made it extremely difficult to carry out her wishes if not reviewed and changed.
Changes to beneficiaries can be made for numerous reasons. Perhaps there are names that need to be changed, percentages that need to be changed, or people who need to be added or deleted. Keep in mind, beneficiaries can be attached to a number of contract structures such as life insurance policies, annuity contracts, and any number of retirement plans (personal or through a company). Also, something to keep in mind, as a rule, a beneficiary designation trumps a will. As you can see, it’s important to review those beneficiary designations and make sure they are all still in step with your wishes.
In addition to beneficiaries, also take the time to review planning documents such as trust documents, power of attorney documents, living wills, and your actual will. Make sure each of these documents remains relevant for you and what your wishes are. There has also been a significant amount of change in tax policy over the last couple years which has affected estate planning so make sure to review these changes with your tax advisor and/or financial planner.
If you’ve watched any business programming or read a financial article, chances are you’ve heard the term asset allocation. Asset allocation is the process by which an investment strategy is built by attempting to balance the risk versus reward by adjusting the percentage of each asset in an investor’s portfolio according to their risk tolerance and goals.
Look at your 401k, or other company retirement plan, and your overall portfolio and make sure your asset allocation is in line with your risk tolerance and what your targets are from a financial planning standpoint. For example, if you have a 401k, 403(b), IRA’s or any other investment account, it’s possible that towards the end of last year you experienced some negative volatility. You probably looked at your statements and were unnerved by the movement in many different sectors. However, if you look at Q1 this year, it’s possible to have seen a significant amount of positive snapback. That said, if you are going to rebalance your asset allocation, recognize the reasons why.
If you would have moved out of some of the sectors that performed negatively at the end of last year, you may have missed out on the rebound in Q1 this year. You want to make sure your asset allocation is in keeping with your long-term desires, don’t just look at the short-term. If you are making any changes, at a negative or positive point, stay in line with your long-term plan. Don’t make changes just because things are hot or cold. It’s easy to get caught up in the moment and step outside what your long-term goals are.
Once you are retired, you need to continue to evaluate your asset allocation. For many of us, retirement can be a season that lasts as long as, if not longer than, our working years. So, make sure your asset allocation is relevant today and is in keeping with your space going forward.
This goes back to a beneficiary check and review of asset allocation. Make sure your documents are lining up with life events. Pull together all your insurance, investment and financial planning documents and take a look at them. Do those documents match up with your current life situation or has there been a change? Did you move to a new job? Were you let go from a current job? Were you married or divorced? Was there a death in the family or the birth of a child? From a planning standpoint, all these major events affect your beneficiary designations and asset allocations.
If you have had life changes, we strongly encourage you to look at the number of things that have specific designations. You may also have some joint ownership things like real estate, business, etc. that need to be evaluated as well. It’s good to create a list of all your documents, policies, assets, et. al. and review with your financial planner to make sure they are up to date with your current life status and future goals.
It’s wise to evaluate your financial plan at least once, if not twice a year. Now that the year is half-way over, it’s a good time to sit with your financial planner and review your goals and current life status. Make a list of all your documents, policies, and assets and review your beneficiary designations and planning documents to make sure they are in keeping with your wishes. Then review your asset allocations to ensure your they are in line with your risk tolerance and goals (think long-term, not just short-term). The final point in our summer checklist is a note about evaluating your overall financial plan and all the documents that fall under that umbrella, to make sure there are no life events that require changes to these plans/documents.
Finally, after all this reviewing, enjoy the summer!
Interested in hearing more about this topic? You can listen to the full episode of the North Main Financial radio show on WSIC by clicking here: Summer Check List (6/22/19)
If you have questions about your financial goals, or would like to talk with us further about our services, give us a call at (704) 987-1425 or visit us at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.
These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of SagePoint Financial.