Planning for the Expected and Unexpected in the New Year
The crunch of leaves underfoot announces the change of seasons and with it, the end of 2020. Many will attest that this year certainly was not what was expected. Along with the end, though, comes a chance for a fresh start. Here are some tips to bring order to an otherwise chaotic time:
Review your benefits.
Many companies are offering open enrollment periods at this time. Make the most of your benefit choices, such as insurance choices, retirement accounts, medical reimbursement accounts, dependent care accounts and Health Savings Accounts.
Know your investments.
You’ll soon be receiving annual statements for retirement, IRA and investment accounts. Review your asset allocation – how much you have in stocks, bonds and money market instruments. If you have an appropriate allocation, stick with it. Determine if any rebalancing is required to get your mix back in alignment.
See more: What is Behavioral Finance?
How’s your Uncle … Sam, that is?
Blink and it will be time to start working on your 2020 tax return. Will you be owing or getting a refund? Review your income tax situation. Determine if a large refund is right for your situation. Remember, you’re providing Uncle Sam with a 0% loan as he hangs onto your refund or overpayment. It may be better for those funds to be in your pocket throughout the year to provide funds for retirement or paying down debt.
Speaking of goals …
Where do you want to be financially? What are your goals? What about your spouse or partner? Have you had “the talk?” Some of the best conversations are over coffee or a dinner out. Invest a little time in yourself and your future. It may be retirement, sending kids to college or buying a home. Be realistic and include some fun in there, too.
For want and need, save while you may; no morning sun lasts the whole day.
Benjamin Franklin coined that phrase. Are you ready for your rainy day? Do you have an adequate emergency fund? Or has it been dealt a blow? Aim to have a fund equal to three to six months of essential expenses. You may not think it’s attainable, but small changes can make a big impact. As little as $20 a week – a latte a day – gives you an emergency fund of more than $6,000 in five years. Keep saving a little longer, and that emergency fund has grown to more than $200,000 spanning a 35-year working career.
See more: Saving During the Season of Giving
Vow to plan better.
Many don’t plan to fail, but many fail to plan. While planning certainly comes into the big items in life, such as retirement or a college education, it also applies to the small things in life. Plan better when it comes to banking. Can you reduce fees or overdraft charges? Negotiate everything. Don’t hesitate to ask for a better deal – a phone call made may trim a bill significantly. Better planning can mean more money in your pocket, whether its eating in versus eating out, fees, buying clothes or gas to run errands.
Don’t be afraid to reach out for help in tackling these topics. The COUNTRY Financial Security Index continues to show that those who work with a trusted professional and have a plan feel more in control, save more and feel better able to accomplish their important life goals.
*COUNTRY Financial and its representatives do not give tax or legal advice. You should always consult with your tax or legal professional for advice specific to your personal circumstances.
[infobox alignment=”full” title=”Open Enrollment 2021″]
The Affordable Care Act (ACA) has made a significant impact on many Americans. Having affordable health insurance protection can make a positive impact on your budget and your well-being. A key element with ACA is that everyone is guaranteed coverage regardless of their medical history. There are no pre-existing conditions and no underwriting.
The annual open enrollment period allows anyone to apply online at healthcare.gov. This is a short window of just 45 days and can change year to year. In 2020, it is set for Nov. 1 through Dec. 15* for an effective date of Jan. 1, 2021.
What happens after open enrollment? When open enrollment is over, the period is called Special Enrollment Period or SEP. This allows an individual or family to apply only if they have what’s called a qualifying life event. A few of the most common events are getting married or divorced, involuntarily losing job-based coverage or having a baby/adopting a child.
Another key element are the terms: On Exchange and Off Exchange. On Exchange, means that an individual or family qualifies for financial assistance. They would want to utilize On Exchange to obtain the tax credits or subsidies, or if they wish to shop all carriers participating to compare and contrast the coverages.
Off Exchange means that an individual or a family does not qualify for financial assistance. They will not receive financial assistance and can apply directly through a carrier.[/infobox]
– About the Author: Joe Buhrmann is a Certified Financial Planner™ and is Manager of Financial Planning Support for COUNTRY Financial.