Some Things to Think About In the New Year

January 10, 2014

As I was surfing the Internet during a snowstorm, I read an article about a plane that skidded off a runway. There was also a plane that landed on a highway in New York recently. Fortunately, there was no one seriously hurt in either incident but as someone who flies a lot for business, seeing these stories always gives me a moment of pause…as does thinking about the loss of friends along the way, at ages that were far too young.

We just never know when the day that we’re living in is the last day we’ll have. It’s with that thought in mind that the plane skidding off the runway made me think about my own financial life. Here are some things that I want to make sure I do early in the New Year. (Maybe you’ve had the same kind of thoughts and there’s no time like the present to take care of these issues in your financial life.)

I want to read my will, power of attorney, advance healthcare directives and any other estate planning documents that are floating around in my files. This would be a great thing for everyone to do on an annual basis. The purpose of this is to make sure that the documents still reflect your current wishes and that anyone named to a position of importance is still alive and appropriate for that role.
I want to check my beneficiary designations on life insurance and retirement accounts. Since these assets don’t look to a will for direction, getting the beneficiary designation right is rather important. My kids aren’t old enough to manage money on their own so these assets (for me) are held in a trust until distribution dates (ages, actually) that I have set in my estate plan. For a while, my EX-WIFE was the beneficiary on these assets. That was not my intent, so I had to make sure to get the right beneficiary designation in place so that some seriously unintended consequences weren’t happening after my death. Sometimes, I have to remember that I too will be leaving this planet at some point. The 20-something year old me that thought I was immortal was actually wrong!
On the off chance I don’t go down in a plane crash or a car wreck, I need to be prepared to live a long life. So, I’m reviewing my asset allocation. This worksheet can help you look at your own asset allocation and see if it’s appropriate for you.
Along with my asset allocation, I’m running retirement calculations to see if I’m saving enough money to fund the kind of lifestyle that I want. This calculator is a great way to get a rough estimate of how you’re doing. Ideally, you run it on an annual basis so that you have more than a single snapshot of your retirement picture. After 3-5 years, if you save your calculations with different file names, you will have a sufficient data set to see trends and patterns emerging. You’ll see that you’re either getting closer to your goals, further away, or that you’re moving forward but adjusting your goals at the same time. Regardless of what you learn, you’ll be learning and taking a more active role in preparing for your future.

I hope it doesn’t take something as dramatic as a friend’s death or reading about a plane crash or near-miss to get you ready to review where you are with your financial planning efforts. Call it a New Year’s Resolution, call it being proactive, call it getting started…whatever…just take a few minutes to do the things above. And, if you haven’t ever done any of these things, get them done now. None of us are immortal so we need to do these sooner or later. My vote is sooner!