Welcome to Financial Spring Cleaning Season!
This is a great time to address your spending habits and take control of your financial future. Each of these steps is meant to simplify your life, magnify your understanding of your finances, and create confidence in your financial future. As you complete each step consider what this could mean for your retirement. Consider talking with a Financial Advisor about your retirement plan and see how a little spring cleaning might just make all the difference!
Address Your Spending
Many folks are spending too much or spending on unnecessary items. To help you determine what’s necessary and what’s not, review your past six months of expenses. Are you still being billed for subscriptions or memberships you no longer use? Are you paying more than you thought for recurring expenses like insurance or utilities? This is a good time to shop around for better prices or eliminate items you no longer need.
Check Your Credit Score
It might be a good idea to check your credit score at least once a year to see where you stand and make sure there’s no incorrect information or fraudulent activity. You are entitled to a free annual credit report from each of the three major credit reporting agencies: TransUnion, Experian and Equifax. You can request all three reports via the government-authorized website www.annualcreditreport.com.
Track Down Your Employment Retirement Plans
You may be able to roll assets from former employers’ plans into your current plan, or you could roll them into an IRA. If you have multiple IRAs, you might consider consolidating them into one for ease of tracking performance, managing fees and taking required minimum distributions (RMDs) during retirement. You may also want to have a traditional IRA and Roth IRA to diversify your tax liability when you start taking withdrawals later.
Modernize Your Filing System
If you’re holding on to paper documents, now’s a good time to digitize your files. Sign up for paperless documentation on all your accounts and opt in to receive statements, policy documents and other important information electronically. Shred outdated receipts and other documents you no longer need. The IRS recommends keeping tax returns and related documents for three years after the date of filing. Consider setting up a cloud system (like Google Drive or Dropbox) to organize and save important electronic documents.
Do An Insurance Inventory
A good spring cleaning should also include an insurance checkup to make sure you have the appropriate amount of insurance coverage for your home, vehicles and other property. It’s also a good time to create an inventory of your belongings. You can do this by taking videos or photographs of the items you own. Upload documentation and receipts for your items to your cloud filing system. This will make it much easier to replace items in case of a disaster.
Review Your Policies
When was the last time you reviewed your policies to make sure your money will be easily transferred where you want it to go? Check the beneficiary designations on your will, life insurance policies, annuities, checking and savings accounts, and other investments to make sure they are aligned with your wishes. You’ll also want to double-check that your beneficiaries’ information is up to date and accurate.