Transcription:

Episode 16 – Year-End Checklist

00:10:22

Announcer: This is Blue Money, a finance podcast made for cops by cops. With us you know your money’s safe. Lieutenant Jim Donnelly of the Ben Salem Police Department and co-host Kevin McGarry of Valley Financial Group, come together to help protect and serve your financial needs. This is Blue Money.

Jim Donnelly: I want to welcome everyone back to the Blue Money Podcast. This is Jim Donnelly. I’m here at my co-host, Kevin McGarry.

Kevin McGarry: Jimmy.

Jim Donnelly: And Kev today. You know, coming close to the end of the year, 2022.

Kevin McGarry: Crazy, right?

Jim Donnelly: Nah, they went quick. And a lot of times, every guy’s always looking at their paychecks at the end of the year, and they’re looking how much they made. And a lot of people will say, oh man, I made that much, but they have no idea where the money went looking back. So, I thought this podcast would be important to give some people an idea for a year end checklist, a financial checklist, what they should look back at, what they should look at for the future for 2023. So, Kev, what do you have some feedback on that?

Kevin McGarry: I think the end of the year is a great time to reflect. The one thing we like to do with our clients, and anyone that’s a prospect here at Valley Financial Group, we like to review their financial plan at the end of the year. If they don’t have one, help create one. But when you’re reviewing, everyone has a financial goal or should have a financial goal going into the year. The first thing you want to look at is, did you achieve your financial goals? Let’s say it was go on vacation or was it a home improvement? Was to pay your child’s college education? Did you hit those goals? And if you didn’t, why not? And I think that the most important thing there is when you’re looking that mirror and you didn’t hit those financial goals, you have to be honest with yourself and take a look at it. And then when you’re reflecting, like, all right, what’s coming up? Was there anything in my life to change? Was there a birth that we had to plan for? Was there a death, a marriage, a divorce? Did I retire? That may cause my financial plan to change. I think this time of year is a great time to adjust your spending and your financial goals.

Jim Donnelly: Yeah, I agree Kevin, and we’re looking at the checklist. One thing that I want everyone that’s listening to take a look at, one of the first things I think’s the most important is look at your will. When’s the last time that your will been updated? Has anything changed? That’s real easy to get your will updated. So, take a look at that, your will.

Kevin McGarry: Jim, and on that how many reviews do we do? We do a lot. I mean, and prospects that come in here, how many say out of 10 actually have a will?

Jim Donnelly: If six out of 10 have a will and then out of those six, a lot of them haven’t updated in 10 years. So, that’s the one thing that always want to get everyone squared away is the will. So, take a look at it, make sure it’s been updated. Next thing, look at your insurance policies. And when I’m talking about that, I’m talking about your car insurance is going to be renewed. Your home insurance, if you’re rent, make sure you have the renter’s insurance healthcare insurance. There’s so many different insurances that we have. It’s important to look at the premiums we’re paying. Is there better quotes out there that we should be getting? It don’t hurt to check.

Kevin McGarry: Doesn’t, I mean, think about rates of going up this year. And when you take a look at that and you look at where you were last year, my car insurance went up and I didn’t get in any accidents.

Jim Donnelly: You got to always keep staying on top of that. And the most important insurance that we will always speak about here is life insurance. 

Kevin McGarry: Very important. 

Jim Donnelly: Take a look at your policy. Make sure if it’s a term, is it coming to an end? Was it a 10 year term, a 15 year term? We see so many times the lack of people that have insurance and then how it lacks, it’s going to expire in two years. They don’t even know what their payout would be if something happened. So, please make sure you take a look at the will, make sure look at your life insurance.

Kevin McGarry: Yeah, I think too, Jim, when you’re looking at the life insurances, most people we see especially in law enforcement are underfunded. 

Jim Donnelly: The majority are, we know that probably nine out of 10 are underfunded.

Kevin McGarry: The other time is if you’re getting close to retirement or you’re overfunded. So, really trying to see does your life insurance still meet your financial goals and protection of your family?

Jim Donnelly: Now, what about the taxes, Kev, we know that’s coming into an end. December 31st this year, the tax year’s going to be over. What do you recommend that people start looking back at for the taxes or preparing for the future?

Kevin McGarry: I think for planning for taxes for 2022, I would reach out to your CPA. Typically they have a to-do list, but for us, we’re always big on preparation, getting ready for it. Collecting the paper or the information your CPA’s going to need to move forward or be aware of what’s coming. Because a lot of people don’t understand tax codes or the forms that they will be receiving like a 1099R for a retirement account or a 1099B for a taxable account. Right now it hasn’t been a fantastic year in the market and the markets are down. So look at, hey, any of my taxable accounts, do I have losers? Investments that lost money? And can I sell them to offset any gains? Can I make a last minute tax deduction? Can I contribute to a 529? Did I max out my retirement account? Did I do that? If I’m retired and I’m the age of 72, did I take my requirement minimum distribution for the year? And if so, how can I plan for taking it earlier or later next year? So, these are things we look at when we look at tax planning.

Jim Donnelly: It’s really important. Another important topic, Kev, is for people to look, what’s the next six to 12 months look like financially? Do they have a big purchase coming their away? Is one of their daughters going to get married? Is there a divorce pending? Is there a birth of a child? Is one of your kids starting college? Are you going to start a small business soon? So, it’s important to look at the future, how are you going to get that money? Do you have its savings? Are you going to use a credit card? Are you going to take a personal loan? So, you have to really look at how you’re going to pay for one of these big purchases. And if you are going to get a loan, there’s plenty of banks out there, there’s different interest rates you want to shop around and make sure you’re getting the best interest rate because you’re going to be paying for a lot of years. So, you have to do your homework, you have to do the research. And remember, the most important thing is when you’re taking new debt on, remember, if your monthly payment is going to go over your budget, it’s not going to work. You’re going to start going to debt. So, be careful of that. Look at the monthly payment that you’re comfortable with and make sure that fits in your monthly budget. So, Kevin what else do you have there for everyone on checklist?

Kevin McGarry: I think there’s two quick things, Jim, for those that are still working, a lot of the listeners on this podcast are still out there every day working, review your employee benefits. Did you max out your retirement accounts this year? Or at least take advantage of the match. For those, for 2022, the max was 20,500. If you’re older than age 50, it’s additional 6,500 per year for 2022. Are you satisfied, not just in your retirement account, but are you probably diversified? Does the portfolio still meet your needs? Did you look at the risk tolerance? Did you look at the longevity? Does the portfolio still meet your longevity? You want to make sure the portfolio didn’t shift and get unbalanced and how do you rebalance? So, you want to look at if the portfolio still meets your needs. Some of the firms out there have HSA accounts. Did you max out on that as well? And the last thing I would say is what I’m always amazed about when clients come in here with a 401K or a 457, they haven’t updated their beneficiaries nor have they reviewed it. So, always reviewed that beneficiary.

Jim Donnelly: Yeah, that’s important, Kev. How many times we’ve seen people get divorced and then someone’s about to die and then we look back and hear their ex-wife was a beneficiary and never changed it, and she starts a whole nightmare. So, please keep an eye on that. Also remember everyone’s entitled to get a free copy of your credit report once a year. You could find that information at the Federal Trade Commission. There’s a website. Look at it. You should be getting that once a year. It’s free. It’s important for you to keep an eye on your credit and credit score. Also, don’t forget, pay down your credit card. Look at your credit card debt. We have a podcast earlier in a year about the avalanche approach or the snowball approach. So, if you didn’t check out that podcast, listen back to it and look at some of the recommendations about paying the credit card debt, how important that is. So, Kev, with that, we’re going to try to wrap up this podcast. What are the three things, or a couple things that you want people to remember?

Kevin McGarry: First thing is, the year flew. So, it’s always the one thing I hear from our clients or prospects at Valley Financial or people in general. They never have never have time to do this. Take time, get it on the calendar. If you’re married, sit down with your spouse, sit down with your partner. Take time and make sure you’re still on track toward your financial goals and see how you can always improve it.

Jim Donnelly: It’s great advice, Kev. And with that, Kev, we’re going to wrap up the Blue Money Podcast for today. I want to thank all the listeners for tuning in and have a great holiday. We look forward to seeing you guys in 2023. Be safe out there.

Kevin McGarry: Be safe. Happy holidays. Have a great 2023.

Announcer: Thanks for listening to Blue Money. To learn more about Jim and Kevin or for a free financial assessment, visit valleyfinancial.com or click on the link in the podcast description or show notes. Until next time, safe investing. 

This material is intended to be educational in nature and not as a recommendation for any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended for any form of substitute or individualized investment advice. This discussion is general in nature and therefore non intended to recommend or endorse any asset, class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment clients, as well as all other readers are encouraged to consult with their own professional advisors, including investment advisors and tax advisors. Valley Financial can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.