The beginning of the year tends to get most of the attention when it comes to financial planning. We set goals, make resolutions and think about what we want to accomplish in the months ahead. But October may actually be one of the most useful times to revisit those plans.
There are still several months left in the year—enough time to make meaningful adjustments—but the December 31 deadline for many financial and tax-planning decisions is beginning to come into view. Before the holiday season gets into full swing, consider taking some time for a fourth-quarter financial check-in.
1. Revisit Your Retirement Contributions
Start by looking at how much you've contributed to your retirement accounts so far this year.
If your goal was to maximize your workplace retirement plan—or simply increase your savings from last year—are you on track?
For those who are able, the final months of the year may provide an opportunity to increase contributions. This can be especially worth reviewing if your income changed during the year, you received a bonus or raise, or your expenses have shifted.
And remember: contribution limits and rules can vary depending on the type of retirement account and your age, so it's important to understand which limits apply to you.
2. Take a Look at Your Tax Picture
Tax planning can be much more effective when it happens before the year ends. A significant change in income, investment gains, the sale of property, retirement distributions, a new business venture or other life events can all affect your tax situation.
This is also a good time to review whether your withholding or estimated tax payments are still appropriate and whether there are planning opportunities that should be considered before December 31. Your financial advisor and tax professional can work together to help identify strategies that make sense for your particular circumstances.
3. Review Your Investment Portfolio
Markets move—and when they do, your portfolio can gradually move away from the allocation you originally intended. A fourth-quarter review can help determine whether your investments are still aligned with your goals, risk tolerance and time horizon.
It may also uncover potential tax-planning opportunities within taxable investment accounts. For example, realizing certain investment losses may help offset realized capital gains in some circumstances. The goal isn't to react to short-term market movements. It's to make sure your investment strategy still reflects the plan you've built for the long term.
4. Make a Plan for Charitable Giving
If charitable giving is important to you, don't wait until the final days of December to decide how you want to give. Depending on your circumstances, there may be alternatives to simply writing a check. Strategies involving appreciated securities, donor-advised funds or qualified charitable distributions from an IRA for eligible individuals may be worth discussing.
Planning earlier also gives you more time to think intentionally about the organizations and causes you want to support—and how your giving fits into your broader financial plan.
5. Review Your Health and Workplace Benefits
Fall is open-enrollment season for many employers, which makes this a natural time to take another look at your benefits. Rather than automatically choosing the same options you selected last year, consider whether anything has changed.
Review your health insurance choices, Health Savings Account or Flexible Spending Account elections, life and disability insurance coverage, and other benefits available through your employer. If you have an FSA, it's also important to understand your plan's rules regarding unused funds so you aren't caught off guard at year-end.
6. Check Your Beneficiaries and Important Documents
Some of the most important financial planning tasks don't involve investments at all. When was the last time you reviewed the beneficiaries listed on your retirement accounts and life insurance policies?
Marriage, divorce, births, deaths and other family changes can make old beneficiary elections outdated. It's also worth periodically reviewing estate planning documents, powers of attorney and healthcare directives with the appropriate professionals.
Even if nothing needs to change, confirming that everything still reflects your wishes can provide valuable peace of mind.
7. Look Back at the Goals You Set for This Year
Finally, go back to the bigger picture. What did you hope to accomplish financially this year?
Perhaps you wanted to increase your savings, reduce debt, prepare for retirement, help a child or grandchild, update your estate plan or simply become more organized. You don't need to have accomplished everything by October. The purpose of a financial plan isn't perfection—it's direction. The fourth quarter gives you an opportunity to see what's working, identify what still needs attention and decide which priorities should carry forward into the coming year.
There's Still Time
December has a way of arriving quickly. Between holidays, travel, family commitments and year-end deadlines, financial planning can easily get pushed to the bottom of the list.
October offers something valuable: time.
A thoughtful review now can help you address important decisions while there is still an opportunity to act—and enter the new year with a clearer understanding of where you stand and where you're headed. If you'd like to review your financial plan before year-end, the Parliament Wealth team is here to help you determine which opportunities deserve your attention and how they fit into your larger financial picture.