By: Kathryn McCall
As we close the books on a great year in the market, we at GBB begin to think about the next decade. The beginning of a new year (and new decade), can be a great time to reevaluate your financial goals and set new goals for the year ahead. Whether you are already retired or still in the accumulation phase, a new year can be a great time to check in on your plan. We recommend our clients review their financial plan at least once per year in order to make sure they’re staying on track to achieve their goals.
Here are five activities to consider for the new year.
Beyond looking at the annual performance of your portfolio, taking stock is about evaluating the risks in your portfolio. Given the positive returns in U.S. stocks and bonds in 2019, it is possible that your overall stock allocation could have increased during the year. We know that sometimes GBB is not your only advisor. We believe it is critical that you evaluate your risk exposure across all your investment accounts. With the market hovering around all-time highs, it is important that you are not duplicating your risk inadvertently or taking on more exposure to the U.S. stock market than you intended originally. How do you know how much risk you are taking on? If you reach out to your GBB advisor, they would be happy to evaluate that for you.
Think back on the last couple of years and ask yourself if you have any major changes in your life. This could include a marriage or divorce, the birth of a child or grandchild, or the death of a loved one. If you have experienced any of these changes, we recommend that you double check beneficiary settings on each of your retirement accounts to ensure that every account is assigned the correct beneficiary.
REVIEW YOUR BUDGET
Did you have any major expenses that threw off your 2019 budget? One of the biggest things clients tell us is that they have an expense that they didn’t plan for (medical costs, new roof for the house, new car, etc.) which threw off their annual spending number. We believe it's important to monitor your spending each year to ensure you stay on track. If you are having difficulty budgeting, there are a variety of budgeting and expense tracking apps, hat make it easier than ever to track how you spend your money.
REVISIT YOUR FINANCIAL PLAN
Your financial plan is a living, breathing document that is designed to help you estimate your probability of reaching goals based on assumed behavior and returns. As your behavior evolves over time, it is crucial to update the plan regularly. After you do so, you’ll have a better idea of your personal financial situation and can determine if you want to spend more or need to spend less. Either way, starting a new year is a great time to be informed.
I asked my grandfather, who just turned 92, what his goals were for this year. He told me he wanted to keep breathing and visit Patagonia. No matter the age, setting goals can be a great way to set your priorities for the year. I love to hear about what our clients are excited to do at the beginning of each year. What kinds of goals? Maybe you would like to save an additional amount for retirement? Maybe there is a major purchase you would like to make this year (big trip, home remodel, weddings etc.)? Or maybe gifting to charities through a Qualified Charitable Distribution (QCD). No matter what the goal is, taking the time to reflect on it and adding it your financial plan is a great start toward achieving that goal.
If you are interested in sitting down to discuss your situation, feel free to reach out to your GBB advisor to schedule an appointment at (916) 713-0833.