It’s a new year, which means it’s also time to re-evaluate your financial plan. 2020 was an unusual year filled with uncertainty and market fluctuation. After such a year, financial planning is more important than ever. To help you get started, here are a few financial planning tips for 2021.
Re-evaluate Savings Options
Interest rates are low. This is great if you’re looking to buy a home or obtain other types of loans. It’s not so great if you’re saving money. Your interest income is probably much lower than in previous years. Consider alternatives that might generate higher returns. For instance, a high yield online savings account might offer a higher interest rate than your current savings account. Does it make sense to move your funds elsewhere or to invest them? Understand your options and use the new year to make smart decisions about your savings.
Adjust Retirement Planning
How is your retirement account performing? Be sure to connect with your financial advisor and discuss changes that might be worthwhile given your age, retirement funds, and aversion to risk. Additionally, keep an eye on laws being discussed in Congress that may impact retirement options. For instance, the SECURE Act 2.0 is likely to wrap up this year. Among other things, it includes an increase in catch-up contributions and a credit to small businesses to encourage employer contributions. Regardless of the introduction of new laws, a yearly review of your retirement account is essential and one of the most important financial planning tips.
Monitor Tax Law Changes
Industry professionals don’t predict any major changes to tax laws this year. However, with a new administration coming in, there’s always a possibility. Stay up-to-date on new developments and adjust your financial plan accordingly. This goes beyond just savings and investment accounts. It includes real estate investments, gifting, and other tax strategies.
Don’t Forget Your Estate Plan
Whenever you make changes that impact finances, it will trickle through to other things like your estate plan. We’ve always said that financial planning and estate planning go hand-in-hand. Thus, you should review your estate plan every year as well.
We hope these financial planning tips are helpful. Please contact our team at any time to schedule a consultation to create a new estate plan or update an existing one. We are here to support you!