It’s a New Year! Is it Time to Reevaluate Your Financial Plan?

It’s a New Year! Is it Time to Reevaluate Your Financial Plan?

January 04, 2022

Ready or not, 2022 is here! The turning of the calendar is usually considered a time for fresh starts, intentional planning, and renewed motivation to conquer goals and accomplish things that are important to you (hence the tradition of New Year’s resolutions). And after the last couple years we’ve had, a truly fresh start is just what we need. As you transition into 2022 and all this year will bring, take some time to think about your long-term plans and reevaluate your decisions, especially in the following key areas.

Tax Strategy Planning

In the wake of a change in administration, questions naturally arise about how tax laws could change and how that will affect your wallet. If tax rates increase for your tax bracket, (1) you may want to reconsider your savings and investing strategies. Keep in mind Biden’s Build Back Better Agenda (2): The $1.2 trillion infrastructure portion of the bill was signed into law in November and the social spending part of the bill, which will involve many tax changes, was recently passed by the House and is awaiting approval in the Senate. (3)

The social spending bill has far-reaching implications for people in all tax brackets, and it’s important to review the changes with a qualified professional in order to fully understand how your financial plan will be impacted and to put you in a better position to minimize any detrimental effects.

Because of how often new tax legislation is introduced, tax planning is not a one-and-done deal. Revisit your plan to make some shifts that will benefit you in the long run. 

Tracking Retirement Funds

As we learned from the Great Recession, it is important to stay proactive when it comes to your cash flow and retirement funds. The temptation to adopt a “set it and forget it” approach can create financial blind spots, especially when the demands of work and family make it challenging to carve out time to review finances. Make sure you or your financial advisor is on top of tracking and monitoring your investment accounts, retirement plan balances, and other assets, and commit to start keeping a pulse on the health of your family’s finances at least once a quarter, if not monthly.

Insurance Coverage

Inadequate insurance coverage is a common issue that can derail retirement plans, especially in the event of unforeseen health problems or injuries that force individuals to retire early. A 2020 study found that only 54% of Americans have life insurance, and that 40% of policyholders reported that they wished they had bought coverage sooner. (4) Applying for coverage at a younger age can result in lower premiums, and policies of varying term lengths can be stacked so that your coverage decreases over time as your investment assets increase and your need for insurance decreases. It’s prudent to make sure you have the proper policies and coverage for your unique situation.

Estate Planning

Regularly reviewing your estate plan is a crucial component of your financial strategy. Life moves quickly, and it is all too easy to forget how much can happen in a short period of time. Arrivals of new children or grandchildren, health conditions, asset purchases or liquidations (such as buying a new home), marriage/divorce, retirement, unemployment, remarriage, and deaths in the family can make a significant impact on the big picture of your estate plan. Additionally, potential changes in estate tax law which have been mentioned by the new Biden administration (such as reducing the estate tax unified credit) can necessitate revisions to your estate plan. Certain estate planning techniques can aid you in achieving your wealth transfer goals, whether they include bequests to individuals or philanthropic organizations, in a more tax-efficient way, allowing your heirs and charities to receive increased benefits.

Let Us Partner With You

As we settle into the new year, it’s wise to anticipate and prepare for the changes that every season of life brings. By February, most people give up on those popular New Year’s resolutions; so move toward securing your financial future now by checking off some of these items. 

If you are ready to reassess your long-term goals or would like to discuss how to build a solid foundation for your future, our Center for Wealth Management team is here to help. Our comprehensive process not only designs a customized plan for your unique future, but also accounts for the inevitable life changes that happen along the way, allowing you to breathe easier. If you need help with your plan, call (248) 220-4321or email robert@cwmfinancial.net. You can also schedule a meeting by visiting www.calendly.com/cwmrob/initial.

About Rob

Robert Moore is senior partner, financial planner, investment advisor, and co-owner of Center for Wealth Management, an independent, fee-based wealth management company based in Troy, MI. With more than 15 years of experience, Rob provides customized advice and solutions that are in the clients’ best interest. He strives to always go above and beyond his clients’ expectations, helping them retire with more security than they had before, and invest their time and energy in what’s most important to them. Rob specializes in working with DTE Energy employees, helping them maximize their benefits so they can reduce taxes, prepare for retirement, and protect their families through a comprehensive planning process. Rob graduated from Michigan State University and holds the CERTIFIED FINANCIAL PLANNER™ and Chartered Financial Consultant® (ChFC®) certifications.

Rob is known as a diehard family man who enjoys spending time with his beautiful wife, Jill, his daughter, Brookelyn, and his son, Brayden. When he’s not working, you can find him playing basketball once a week, squeezing in a round of golf, and watching college football and basketball with friends and family. He is passionate about enriching the lives of others through his church involvement and service at a community addiction program. Learn more about Rob by connecting with him on LinkedIn.

__________

(1) https://www.forbes.com/sites/davidrae/2021/11/21/new-standard-deduction-and-higher-new-tax-brackets-for-2022/?sh=1e0666bf48dd

(2) https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf

(3) https://www.forbes.com/sites/jonathanponciano/2021/11/15/everything-in-the-12-trillion-infrastructure-bill-biden-just-signed-new-roads-electric-school-buses-and-more/?sh=70d6c92161f4

(4) https://www.policygenius.com/life-insurance/life-insurance-statistics/