If you’re like many investors, you spent plenty of time during tax season with your C.P.A. and financial adviser. It’s a time when you’re often inundated with financial papers and reports, so it’s common to pull back and be a little less attentive in the summer. While your mind has drifted toward a beach vacation, it can become very easy to let your financial plan ride and pay little attention to it during this time.
At Henssler Financial, we believe July 1 should be considered the beginning of a new year. Many of the financial resolutions you made Jan. 1 may have fallen by the wayside as the ups and downs of life happened. The good news is that a mid-year checkup provides you enough time to get back on track and to make changes that can increase your bottom line for the year. Because people are less active with their finances during the summer months, that also means your adviser is less busy, providing a perfect opportunity to get a little more attention from your experts.
Given the current market conditions, now is a great time to rebalance your investments, trimming the outperformers and grabbing some underperformers at a discount. You should also take a look at your liquidity needs. With the market near all-time highs, it is a good time to sell some stocks and secure those profits into fixed-income investments for the near future. You may also want to take the time to ensure your investments and current allocation truly reflect your risk profile and time horizons so that you are on track to meet your goals.
Investors in their 40s may want to use the slow season to take a look at upcoming college costs for their children to ensure their planning is on track. Coverdell Education Savings Accounts and 529 Plans should be reviewed to make sure they are meeting your expectations. Investors in their 50s should consider using the summer months to reevaluate their insurance needs. Life insurance needs should be decreasing in coming years while the need for long-term care coverage may increase. For investors in their 60s, their expected Social Security benefits should be evaluated. While you can apply for benefits as early as age 62, your decision to continue working greatly affects how your benefits are taxed. Seniors may also want to begin discussion with their adviser about their withdrawal strategy once they do retire.
As any tax professional will tell you, it is much easier to affect your taxes during the year than after the tax year has closed. If you are rebalancing or filling up your liquidity bucket, you may want to recognize any losses you may have to offset your gains. Tax loss selling does not have to be an end of the year event only. By working closely with your investment adviser and your C.P.A., you can tax loss sell throughout the year to better control your tax situation. You should also have a good idea of how your income for the year is shaping up, so you may want to take a look at retirement accounts that you can fund to reduce your taxable income.
If you’ve had any significant life changes, such as a marriage, divorce, a change in employment, a purchase or sell of a home, or you’ve reached a significant age like 70 ½, a mid-year tax projection can identify areas where you may need to take steps to mitigate any unpleasant surprises or penalties.
Overall, mid-year reviews provide you with greater planning opportunities should you discover the need to adjust your plan. If you’d like to review your financial plan to ensure you’re on track, the experts at Henssler Financial will be glad to help:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166.
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
