Last year we did a two-part blog series on planning ideas that are a good fit for summertime. It was such a hit, we thought we’d update these for the current year!
Check Beneficiaries
The first one is easy, as it’s always worthwhile to at least once a year review the beneficiaries of all of your investment and bank accounts, along with pensions, life insurance and annuities to ensure those named still meet your wishes. Last year we recommended keeping a list of these beneficiaries somewhere safe to make future reviews easy, so get that list out and take a quick peek. For bank accounts and taxable investment accounts, consider adding a payable on death (POD), or transfer on death (TOD) on those accounts. This can make transferring to beneficiaries upon your death more efficient as these designations generally bypass probate.
Mid-Year Budget Check
Many companies do a pay-review in Spring and Summer, so you may have received or soon receive a pay increase. Now is a good time to review your budget and reflect on your spending, saving, and giving.
Is your spending in line with what you had anticipated? Had to tap into any emergency funds that now need to be replenished? Do you have some home maintenance or other large purchases that are coming soon for which you need to budget? Now is a good time to check in and put together a plan.
How about your savings? A general rule of thumb is to save at least 15% of your income towards retirement if your cash flow allows. If you are set up to save a percentage of your income into your employer’s retirement plan, then your savings should adjust automatically as your salary increases. If not, consider using this time to determine the amount you want to save to true-up the desired savings for the year.
Finally, are you meeting your giving goals? Many charities predictably see an increase in giving at year-end, but mid-year tends to be a lean time for good causes. If you plan to give away a certain percentage or dollar amount this year to your church or favorite charity, consider giving at periodic times throughout the year. You might also explore giving to a Donor Advised Fund (DAF), which allows for an income-tax benefit at the time of deposit to the fund, but also allows for granting money to qualified charities at whatever time you as the donor determine.
Next month, we’ll address more relational and emotional aspects of planning.