Five Life-Impacting Decisions that Deserve Attention in 2019
By Paul Hynes, CFP®
With the start of a new year, it’s advisable to revisit key decisions and arrangements you’ve made in the past. Here is our short list; feel free to sort through the list of those most relevant to you.
1. Review your beneficiary designations.
Time marches on. Circumstances change. Yet, many individuals fail to revisit their beneficiary designations on a regular basis. There are countless examples of assets being left to deceased relatives or ex-spouses through oversight or neglect.
Don’t let this happen to you. Ensure that the beneficiary named on the designation form for each of your IRAs, 401(k)s, insurance policies, annuities and so on is still the person or persons you want.
2. Evaluate your insurance coverage.
Insurance is too expensive to simply “set it and forget it.” Re-evaluate your needs—they can change. This applies to all types of insurance—homeowners, auto, life, disability, umbrella, etc. Are you paying the high cost for a whole life insurance policy when all you need is a term policy? Do you have an umbrella policy that offers liability protection above the limits offered under your homeowners and/or auto policy in the event that you’re sued? Is your home covered for current replacement cost? A periodic review of your insurance policies with your insurance agent is a prudent exercise that can pay off if the unforeseen happens.
3. Review your estate plan.
This is especially essential if you have children or travel a lot. Who will be your children's guardian if you and your partner pass away? Who will oversee the funds and how they’re distributed? Do you have a power of attorney for both health care and financial matters for yourself, your spouse and adult children?
Estate planning is about more than just having a will. Make sure family members know where to find your important documents in the event of your death. Help them settle your estate and move forward without additional stress or loss of assets.
Furthermore, if you don't clearly spell out who gets what, you can unwittingly force your heirs to go through probate. That can trigger conflict among your loved ones, subjecting those you care about to painful and costly delays and unnecessary expenses. Consult with your attorney to make sure your estate plan is up to date.
4. Save as much as you can.
Commit to maximizing your savings to take advantage of the increased contribution limits for 2019 announced by the IRS¹. Use employer-sponsored retirement plans such as 401(k)s, 403(b)s or set up a monthly deposit into your IRA—where the annual limit increased to $6,000. For tax year 2019, you can contribute up to $19,000 to 401(k), 403(b), and most 457 plans, with a $6,000 catch-up contribution allowed if you are age 50 or older. If you are self-employed, you may want to look into whether you can establish and fund a solo 401(k); additional annual contributions of up to $56,000 plus catch-up may also be made to solo 401(k)s.
Do you have college-bound kids? Use a 529 plan, shifting and rebalancing between it and traditional savings depending on how your life, retirement plan, and the ambitions of your children change as you all grow older. Make these deductions automatic—if the money never touches your bank account, psychologically it won’t feel as if you’ve missed anything.
5. Check your credit score.
Each consumer is entitled to one free credit report annually from each of the three bureaus: Experian, TransUnion, and Equifax. When was the last time you ordered your credit report? If it’s been longer than a year, there are several reasons you need to check on it. Some of the top reasons are to correct any mistakes and look for signs of identity theft. Consider a credit monitoring service—there are plenty of low-cost, yet effective options out there.
Many of us give more thought to our car’s maintenance than we do our own. Like a routine and essential check-up, an annual review of these key items can help keep your life and the future of your loved ones humming along more smoothly and confidently.