The Snow Has Gone – It’s Time for Annual Financial Cleaning
After winter clears the snow and controls the weather, spring brings a welcome change. It’s time to open things up and delete the old ones. Just as melting snow reveals what has been hidden all winter, spring is also an opportunity to uncover areas of your finances that need attention.
Let’s discuss five things to check to help ensure things stay organized, efficient, and in line with your plan.
1. Check Beneficiaries
Employee benefits, retirement accounts, and life insurance policies pass to a named beneficiary, not your will or trust. Studies show ~30% of Americans have outdated beneficiary designations, which can lead to unexpected heirs or tax consequences. Life events such as marriage, divorce, birth, or death can change your intended beneficiaries. Even without major changes, it’s wise to make sure your reports reflect your goals.
2. Revisit Auto, Homeowners, & Umbrella Protection
Homeowner’s coverage should reflect current transfer costs, auto loan limits should match your property, and umbrella insurance provides additional credit protection.
Rising property values and the cost of renovating vehicles naturally raise premiums, but some of the biggest increases come after government-approved reforms. Even if the government accepts the 37% increase, insurers can change individual policies within their pricing matrix. Examples of policyholders who have seen increases of 30–75% occur, even though nothing about their home, car, coverage, or claims history has changed. Because of the renewal, more people accept and pay. Without buying the things you choose, you may end up paying more than necessary.
3. Review Your Estate Plan
Home planning is not a one-time job. Trusts, wills, powers of attorney, and health care representatives should be reviewed to ensure they reflect your current wishes and family circumstances.
Despite paying a federal estate tax of about $15 million per capita, Massachusetts has a very low exemption of $2 million, ranking it 49th in the United States. This makes government-level planning very important to citizens.
The test also gives you the opportunity to evaluate strategies such as lifetime gifting, financial aid, or charitable giving that can reduce your exposure to state estate taxes. It is also important to ensure that the heirs, health care representatives, and other responsible parties have electronic copies of your documents, and that the property intended to be returned to the trust is properly registered in the name of the trust.
These steps help prevent delays, confusion, and unintended consequences.
4. Consolidate Old Retirement Accounts
More than 50% of Americans have multiple retirement plans held by previous employers. Leaving accounts scattered can lead to unnecessary hassles, inconsistent investment strategies, and administrative inefficiencies.
Integrating an integrated structure simplifies management, improves oversight, and makes it easier to balance your allocations to align with your evolving goals and risk tolerance. Limited accounts also allow you to coordinate investments, lower fees, a simpler distribution plan is required, and a clearer view of your retirement progress.
5. Declutter Accounts and Organizational Processes
Like a closet or a garage, your financial life accumulates things you no longer use. Old bank accounts, unused credit cards, inactive investment accounts and forgotten deposits create unnecessary clutter. Closing or merging accounts eases your administrative burden. Many find it useful to combine one basic bank account with one basic credit card, making it easier to measure expenses, track spending, and budget for the coming year.
Small Changes That Have a Small Impact
Spring cleaning does not require major changes. It is about maintaining clarity, ensuring consistency, and reducing unnecessary complexity. Taking the time to review these basics strengthens your plan, improves organization, and provides confidence that your finances reflect your priorities and goals.
The opinions expressed in this book are for general information only and are not intended to provide specific advice or recommendations for any individual.
Glenn Brown lives in MetroWest and is the owner of PlanDynamic, LLC, www.PlanDynamic.com. She is a fee-only Certified Financial Planner™ who helps motivated individuals manage their planning and investments, so they can balance children, aging parents and financial independence.
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