Driving to the office during the past week, I have seen growing piles along the road of items being disposed of through the town’s Spring Clean-Up, held each year for people to dispose of large items or items otherwise unsuitable for regular trash pickup. It was interesting to note the variety of items and how they would change from neighborhood to neighborhood. Driving through some of the older neighborhoods, it seemed the most common thing to see would be large piles of brush and tree branches piled neatly for pickup at the curb, no doubt coming from the mature trees that lined those streets and perhaps boosted by the heavy winds and storms that the past month has brought to our region. In the newer neighborhoods, large boxes for furniture and electronics, the tell-tale signs of a first time homeowner, lined the streets. It reminded me of two things. First, it was really time to clean out my garage; and second, that it was also a good time to sit down and also do some financial spring cleaning.
Spring is the natural time to do a regular financial check-up due to both its timing near the start of the year and the inevitable focus that tax season brings to our financial situation. Like the Spring Clean-Up, depending on your own situation, other things may be in more need of your time than others, but here are some general things that you may want to visit as part of your own financial check-up:
Major Life Changes
If there have been any major changes in your life, such as marriage, parenthood, retirement, or a new job, now is a great time to make sure nothing needs to be updated. This can include updating your medical emergency contact information or beneficiaries on your accounts. It is always a good idea to review your will and other estate documents whenever a major change in your life occurs.
Organize Your Documents
Those who have investments know that during the year, you can receive an enormous amount of mail. It can be easy to let this mail accumulate and remain unread. Now is a good time to go through all your opened and unopened mail to determine which you should keep and file, and which can be destroyed. With the ever growing identity theft concerns in the modern world, we recommend if you are throwing away mail with private financial information, that you take proper steps to dispose of it with shredding. If you do not have a shredder, we are always happy to shred any documents you may need to be destroyed. If you are looking to reduce the amount of paper you receive during the year, now is also a good time to investigate any options for electronic delivery.
While any time of year is a good time to do a check-up on your financial situation, one of the most important deadlines for those working and saving for retirement is the tax deadline, which this year is Monday, April 18th. If you wish to contribute to an IRA or Roth IRA for 2015, this is the deadline to complete the process. Depending on your age, you are permitted to contribute up to $5,500 or $6,500 per year and for a Traditional IRA, the amount may be deductible for taxes depending on your income and other factors which you can discuss with your tax preparer.
Consolidate Old Accounts
If you have had several employers throughout your career, you could accumulate several different 401(k)s, 403(b)s, and other retirement accounts over the years. Consolidating these accounts into the retirement plan at your current employer, or into a single IRA can help simplify your financial planning and reduce paperwork. For those in or approaching retirement, consolidating your accounts can also help simplify meeting your required minimum distributions required by the IRS once you reach age 70 ½.
Check your Credit Report
If you do not already subscribe to one of the many credit tracking services available, now is a good time to check your credit report. Once per year, anyone can obtain a free copy of their credit report from each of the three credit bureaus by visiting annualcreditreport.com. Understanding and improving your credit score cannot only help with your ability to get mortgages and car loans, but checking your credit report is also a good way to protect against identity theft if you see strange accounts being opened in your name that you don’t recognize.
Review your mortgage and credit cards
Interest rates have come down substantially from a decade ago and if you have not checked your mortgage, you may be paying more than is needed. Your local bank or mortgage broker should be able to quickly determine if you could benefit from refinancing your mortgage. It is also a good time to review your credit cards. For those with credit card debt, check if there are lower rate options and establish a budget to pay your debt off faster. If you do not have debt, check if your current cards are best suited for your objectives. If your credit has improved since you received your current cards, you may now be qualified for a card with a lower rate or with a better rewards program.
Meet with your Financial Advisor
Perhaps most importantly of all, having gone through all of the above steps, schedule an appointment with your financial advisor. Share any important information you have received from your accountant through your tax filing process along with any other financial information that may have changed or updated. Depending on any changes, it may be appropriate to update your financial plan. Having the most information and understanding of your current situation and goals will allow your advisor to give you the best possible advice to help you achieve your objectives.