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Britt Erica Tunick is an award winning financial journalist who has spent the past 17 years writing about virtually every aspect of finance. She has mastered the art of boiling down complicated financial topics for readers to understand. |
Finical planning is something that needs to be checked and reviewed often, don't make the mistake of forgetting about it. The Importance of Reviewing Your Financial Plan Each Year By Britt Erica Tunick Much in the same way that you need to replace the batteries to fire alarms and carbon monoxide alarms each year, you should also conduct a financial review at the start of each year. As much as we may wish otherwise, financial planning is not something that you can do once and then forget about. One thing to look at each year is your retirement savings contributions. Regardless of how far you are in your working life, it is important to constantly check in on your retirement savings to be sure that you are on track to reach your goal. If you work for a company that offers a 401k plan it should go without saying that if you can afford to you should contribute the maximum amount allowed by the government, especially if your company offers any sort of matching incentive. For 2017, the maximum amount you can contribute to a 401k is $18,000, while individuals age 50 or older can contribute up to an additional $6,000 in catch-up contributions. If the company you work for doesn’t have a 401k plan, or if you are independently employed, be sure to contribute the maximum you’re allowed to put into an individual retirement account (IRA). For 2017, the maximum you can contribute to an IRA is $5,500, with individuals age 50 or over allowed an additional $1,000 catch-up contribution. Insurance coverage is another important area to consistently revisit. If there have been any major changes in your life, such as the birth or adoption of a child; marriage; divorce or the purchase of a new home, take the time to look over your current insurance coverage to see if you need to make any adjustments. Similarly, it can be beneficial to check on whether your employer offers any type of insurance discount, or to simply shop around for competing quotes every now and then to make sure you are getting the best rates possible. If you have any investments, you’ll want to check to see if there is any re-weighing necessary in your investment portfolio. Based on the performance of the market over the past year, and any stocks, bonds or other investment vehicles you may own, it may be time to alter how much money you have in each of these areas. The best way to do this is to check in with a financial advisor who can give you guidance about your portfolio and whether any changes are necessary to meet your goals. Another important thing to look at early in the year is whether you had any capital gains or losses and what that could potentially mean for your tax return. If you made money on any investments that you held for less than a year you will need to pay the same taxes on those gains that you do on ordinary income. Meanwhile, if any of your investments lost money, you can deduct up to $3,000 to offset any gains made above that amount, or against ordinary income. |
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