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4 ways to refresh your financial plan for 2018
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The beginning of a new year is the perfect time for a fresh start and a great moment to reflect on what changed in your life during 2017. Did you get a new job? Find yourself in a new family situation? Move to a different state? When was the last time you reviewed your financial goals in light of these changes? Are you still on track to meet them? Take this time to pause, reflect and refresh your plan. Here are four key ways to start 2018 with a clear view of the financial road ahead.
1. Begin with your goals
Kick off the new year by reaffirming existing goals or setting new ones. Your goals should create the basis for your financial plan and should align with your needs, wants and wishes, like living comfortably in retirement, traveling abroad, remodeling your kitchen or buying a vacation home. Here are some tips on how to turn your goals into an actionable plan:
- Be specific: Be extremely clear with yourself about what your wishes really consist of.
- Measure first: Make sure you understand exactly what “success” looks like to you—you might have a different viewpoint than someone else.
- Make it attainable: Break up a huge goal into achievable sub‐goals.
- Stay realistic: Understand your limits and be clear about your expectations.
- Be timely: Tie your goals to concrete timelines, like “this year” or “before I retire.”
2. Know where your money is and when you should use it
You may be familiar with the concept of asset allocation, but when you’re moving from accumulating assets to using them as income, you also need to understand asset location. It’s likely that you have funds in different types of accounts, like a 403(b), brokerage, IRA and so forth, all taxed in different ways—now, later or never. Check the location of your assets to make sure the timing works—you don’t want to pay taxes now on an account that you plan to use later (or never). Understanding this sequence ahead of time and working with an advisor to come up with a plan is a great way to find the most efficient way to avoid unnecessary taxes and make the most of your retirement savings.
3. Look for the gaps
Today’s goals are a great place to start, but they can change as life unfolds; not to mention the impact factors like rising healthcare costs and changes in the tax code can have on your finances. When you experience the unexpected, make sure there’s room in your plan to accommodate it. Planning to help your grandkids pay for college? What if your health suffers? What kind of legacy do you want to leave? While you plan for the best‐case scenarios, think about how you’ll pivot your strategy if things change. If you prepare yourself hypothetically ahead of time, you’ll be able to move quickly in real life.
4. Be prepared for 2018—and beyond
As we move into the new year, consider creating an estate plan to help make sure that all the work you’ve done can actually help you take care of the ones you love. Your estate plan should include 3 key documents at a minimum. A will (to communicate your wishes and appoint someone to handle your affairs after you're gone), healthcare proxy (to authorize someone to make healthcare decisions for you in the event you become incapacitated) and a durable power of attorney (to allow someone you trust to make financial decisions for you in case the unexpected happens). Beyond the paperwork, take this time to have a conversation with your family to make sure you’re all on the same page. It might be a difficult subject, but being clear with each other and setting expectations today can help make tomorrow easier—for everyone.
Start the new year by contacting a TIAA advisor and discussing your financial plan. Your advisor can help you look at your entire financial picture and make sure it’s aligned with your life goals. A little planning can put you on track for success, in 2018 and in years to come.
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