Personal Financial Plan - Third Quarter

Managing your personal finances is an ongoing process that requires discipline.  Most people are successful at making sure the bills get paid and often saving a little on a regular basis.  However, managing your finances effectively is more than just handling the daily or monthly tasks. 

Below is a monthly calendar for July through September that can serve as a guide to addressing some of these other issues.  The suggestions on this outline may not match your personal financial timeline, but they can serve as a reminder to make sure you address these key considerations when it’s right for you.   

July: Retirement Planning 

Review your planning for retirement

• Consider these three fundamental questions – What will it cost to live after I retire?  How much do I need to have saved before retirement?  What should I be doing now?
• Many financial advisors suggest that living expenses after retirement will be about 70% to 80% of what they were just before retirement. 
• Doing all the math can get complicated so start by using an online retirement calculator to determine how well you are doing in accumulating the funds needed for a financially secure retirement.
• If the calculation indicates you need to save more, create a plan to do so.
• Contribute as much as you can to your 401(k) plan at work and try to get the full employer match contribution.
• Make annual contributions to an IRA.
• Increase your other savings by establishing an automatic savings plan at your financial institution to transfer a certain amount from your checking account into your savings account each month. 

Use some spare time to learn more about investing or handling your finances in general 

• Making thoughtful and informed financial decisions is more important than ever.
• Talk to your financial advisor to better equip yourself with the knowledge and tools to make better financial decisions.
• Read the “financial advice” columns in the newspapers or online.  You will probably find that many others face similar issues.
• Subscribe to a personal financial magazine to improve your financial literacy.

August: College Planning 

As school is about to begin, consider how your children’s or grandchildren’s college educations will be financed

• College costs have been increasing faster than the general inflation rate.
• Enabling a child or grandchild to graduate from college without student loans can help them live a better life once they leave college.
• Custodial accounts are simple and easy to establish.
• Coverdell Education Savings accounts are often used and offer some tax advantages.
• Section 529 Plans have become attractive because they allow larger amounts to be saved with some tax advantages.
• For more information, consult with your financial and tax advisors to determine the best options for both your student's future and your financial plan.

September: Estate Planning

Review your estate plan

• Recent changes to the estate tax laws have raised the threshold on what size estates are subject to tax.  But estate planning is more than just taxes. 
• Be sure you have other important documents – durable power of attorney, power of attorney for health care and living will. 
• If you have moved, divorced, or had new children or grandchildren, you should be sure your estate plan has been updated accordingly.
• Be sure that your estate planning documents can be easily found by your family or estate executor.
• Take time to consult with your legal professionals and your bank’s trust officers to help you create or update your plan.
• Discuss your plans with your family, as well as your executor, and primary beneficiaries.  The better your plans and wishes are communicated first-hand, the greater the chances your intentions will be met and carried out according to your plans. 

Make sure your beneficiaries are still appropriate

• The beneficiaries you designate for your retirement plan and your IRAs will determine the recipients of the funds in the event of your death.
• You may have chosen those beneficiaries years ago and it may make sense to change them.  For example, if your spouse or children do not necessarily need the funds, designating grandchildren may be more appropriate.
• The same holds true for life insurance beneficiaries.  Having someone other than your estate designated as beneficiary on a life insurance policy will shorten and simplify the process of the payment actually getting to the person you choose.
• If you have a favorite charity, you may want to designate the charity as a beneficiary for a portion of the proceeds of your retirement plan or IRA.
• Choosing a beneficiary is important and you may want to consult with your attorney or advisor.