The more advanced planning you do, the better off you will be financially.
We all know money does not grow on trees.
Probably good news for folks in western Kansas. (For you non-Kansans, it's a Kansas thing.)
In all seriousness, money is precious.
How do you make the most of it?
You must make financial and retirement planning a priority, according to a recent Business Insider article titled “A financial adviser shares a 5-step checklist to complete before the end of 2016.”
Look at your liabilities and assets.
Assets certainly include IRAs, life insurance and bank accounts.
Liabilities include debt.
Use this knowledge to prepare for major milestones like buying a home, having a baby, adopting a child, getting married or retiring.
You should also create a plan to pay off your debt.
Review your estate plan.
You cannot predict what tomorrow will bring.
Be sure your estate is in order.
This includes arranging for decisions to be made if you are incapacitated and taking care of your loved ones if you are gone.
Update your beneficiary forms.
Certain assets—like a 401(k) or life insurance payout—are not necessarily distributed through your will or trust but through beneficiary designations on file with the appropriate financial institutions.
These should be review regularly.
When might you need to change them?
You married or divorced.
You had another child.
Be sure you leave these assets to the proper people.
Consider smart tax moves.
You will want to save money efficiently.
One way is to know how taxes will affect your assets—especially 401(k)s or IRAs.
If you are younger than 50, you can contribute up to $18,000 to your 401(k).
If you are older than 50, that number is increased to a maximum of $24,000.
Gift taxes can also affect your finances.
You can currently give up to $14,000 per person each year without being liable for gift taxes.
Another strategy may include converting a traditional IRA to a Roth.
This carries no penalty.
You simply have to pay taxes on the conversion.
Plan your retirement.
It is never too early to plan for retirement.
So you should be planning.
Things to consider include social security, pension, guaranteed income, and tax consequences.
Preparing effectively for the future is best done with help.
Work with an experienced estate planning attorney and an experienced financial planner to create a comprehensive plan for your life and goals.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Business Insider (December 9, 2016) “A financial adviser shares a 5-step checklist to complete before the end of 2016”