If you’re trying to figure out your financial planning tasks for next year, Christine Benz, Morningstar’s director of personal finance, offers a calendar that will take care of some of the top questions you’ll want to address.
Here are excerpts from it.
January
See how you are. “Now is the right time to assess the damage.” [to your investment portfolio in 2022] and see if you’re still on track to reach your financial goals,” Benz said.
“If you’re still in accumulation mode, look at how much of your salary you were able to save and invest last year.” She adds, “15% is a reasonable minimum goal.”
February
Check in with your tax professional and collect your tax documents. “Tax day will be here before you know it,” Benz said. “That means it’s not too early to start gathering your tax documents, especially 1099s that list any income or gains your funds have paid out.”
March
Contribute to a 2022 IRA. “18. April is your 2022 tax filing deadline, and it’s also your 2022 IRA funding deadline,” Benz said.
“For 2022, the contribution limit is $6,000 for those under 50 and $7,000 for those over 50. They go up to $6,500 (under 50) and $7,500 in 2023.
Fund your health savings for 2022. You also have until April 18 to make a contribution to a health savings account if you want your contribution to count for the 2022 tax year.
April
Know what to save and what to shred. “If your file drawer is full of old statements, prospectuses and utility bills from 2003, it’s time to do some purging,” Benz said. But “before you start shredding old financial statements and trade receipts, make sure you have the cost basis documentation.”
Create a root directory. Every household needs a basic document that describes financial accounts, along with the name of the provider, the account number and the names of all the individuals it works with, Benz said.
Important date. April 18 is the tax filing deadline for your 2022 return.
Can
Assess your emergency fund. “Unexpected expenses can occur regardless of your stage of life, which is why it’s essential to stay hydrated,” Benz said. “For most households, holding three to six months’ worth of living expenses in real cash is a good starting point.
Estimate your liquid assets if you are retired. “Retirees will want to keep even more money, in case one of their income streams is disrupted,” she said.
June
Create or review your investment policy statement. “Running your portfolio without an investment policy statement is a bit like trying to build a house without any blueprints,” Benz said. “Your IPS doesn’t have to be complicated, but it should convey the basics of what you’re trying to achieve,” including your asset allocation policy.
Jul
Assess the viability of your portfolio and plan. “Mid-year is a good time to review the portfolio because you have time to course-correct if you’ve gone off track,” Benz said. “Focus on the fundamentals of your plan and portfolio, including its asset allocation.”
August
Create or revise your estate plan. “Planning for your own disability or mortality is not pleasant,” Benz said. “But a basic estate plan — where you determine who will inherit your property… — is essential for people of all life stages and wealth levels.” Do-it-yourself estate planning kits are an option for estates that are simple, she said. .
September
Review your long-term care plan. “Long-term care is another topic that’s not fun to think about, and unfortunately, there are no easy answers about whether to buy insurance or self-fund using your own portfolio,” Benz said.
“To make an informed decision, it’s useful to use data to understand the likelihood that you will need long-term care, the potential duration and costs.”
October
Accelerate college funding. If you haven’t given much thought to your children’s college education, “it’s time to take a hard look at how you’re going to pay for it and whether you’re going to keep the money in a 529 or some other account,” Benz said.
November
Carry out an insurance review. “Most employers offer open enrollment for health insurance and other benefits at the end of the year, but it’s also a good time to review other types of insurance: property/casualty, life, disability, and so on,” Benz said.
December
Perform a year-end portfolio review. “While you’ve no doubt been paying attention to your portfolio throughout the year, the end of the year is a good time to give it a thorough check,” Benz said. “If you own investments in your taxable account that have lost value, selling to generate a tax loss is a way to find silver.
And if your taxable income is less than $44,625, you won’t pay long-term capital gains tax for 2023. So you might want to sell some winners in your portfolio.
