Most of us chuckle when David Letterman presents his nightly Top 10 list. His whimsical and witty observations are fun, but nothing to take seriously.
There are some Top 10 rundowns, however, that should be carefully considered. One such list is related to financial planning and protection. Preserving wealth to ensure your future financial security and comfort of your family is essential. These tips can help.
1. Establish realistic and obtainable investment financial objectives. Although we may dream of limitless wealth, not everyone will achieve such a lofty goal. View your life as if it were a movie, complete with scene changes. Life is not static and your financial aspirations should revolve around long-term strategies.
2. Check and update beneficiary designations on all important accounts—such as IRA accounts, retirement plans and life insurance policies. Your main financial planning goal is to protect loved ones in perpetuity. If all beneficiaries are not listed appropriately, unexpected problems could occur. For example, if your will directs money and property to a second spouse, but the beneficiary designated on insurance policies, IRAs and 401Ks is another person, those assets will go to the beneficiary named on these accounts, not the second spouse. Beneficiary designations supersede will intentions.
3. Rebalance investments on a regular basis.A wise investor sells high and buys low. Consistent review and rebalancing of your portfolio forces you to buy and sell at the best times to invigorate financial growth and protect investment profitability. Periodic review is essential.
4. Safeguard your financial and investment data in a central location.Many folks store important documents all over the place—in file cabinets, desk drawers, even in shoeboxes. You may not have a secure designated spot for everything, but you should. One simple option is to use an electronic vault—a computerized or video record. It saves time and eliminates stress.
5. Have all four estate planning documents up to date.These four essential documents are your will, health care power of attorney, durable power of attorney and living will. Periodically have them reviewed and revised, if necessary, by a lawyer.
6. Consolidate and simplify.In the area of investments, less can be more. Some people invest in multiple instruments and have money in a variety of banks and institutions. Each account must be maintained and managed. Consider consolidating investments, which can reap lifetime benefits. Consolidation results in less paperwork and fewer statements and checks. Plus, estate administration and distribution are also much easier.
7. Review your files with a loved one.According to the U.S. Bureau of Census, nearly 700,000 women lose their husbands annually. Senior widows outnumber senior men by four to one. Too often, financial panic adds to their sorrow. To prevent anxiety over bills, liability and loss of funds after the death of a spouse, have a sound up-to-date financial plan and ensure that your loved one knows where it’s stored. They should also know the location of all related documents.
8. Prevent the possibility of outliving your assets.A smart plan helps pave the path to financial independence regardless of age. A full range of investment and insurance solutions should be provided and updated when necessary to ensure lifetime financial security.
9. Prepare an income tax forecast for 2012.With the potential of rising taxes next year, now is the time to investigate ways to save. Carefully review earnings, expenses and tax-related deductions. Doing tax-related homework now may reveal opportunities for reducing payments or increasing refunds next year.
10. Think about your legacy.What’s most important is to make certain your family is comfortable if something happens to you. Discuss this with a qualified financial advisor, preferably one who is independent with no proprietary products or corporate allegiances. A professional can help you make the best decisions for you and your family. -CL-
Peter K. (Pete) Hoover is a certified financial planner with 30-plus years of experience. Independent throughout his career, he founded Hoover Financial Advisors, PC in 2005, which has received numerous awards for excellence and was singled out by Forbes magazine as one of the “Leading Providers Wealth Managers of the Northeast.