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Are You Ready for a New Year? 5 Financial Steps to Take Before You Say Hello To 2020

December 2019

By: David Thatcher, CFP®

As we approach the year’s end, in the midst of all the holiday hustle and bustle, the last thing you want to think about is taking care of your finances. But since finance-related resolutions consistently place in the top five most popular New Year’s resolutions, (1) why don’t you give yourself a head start on your 2020 financial goals? Here are 5 critical financial actions you’ll be glad you tackled when you raise your glass to the new year.

1. Celebrate Victories and Set New Goals

What financial goals did you set when you rung in 2019? Did you stay on top of those goals or did they get swept under the rug? Take this time to reflect on the past year and mark how far you’ve come, celebrating your progress, no matter how small! Then evaluate your saving and spending from the past year, set some new goals, and adjust your financial plan, taking into account any life changes such as marriage, relocation, or a job change.

2. Invest in Your Future

If possible, max out your contributions to your 401(k) by the end of the year to make the most of your retirement savings. For 2019, you can contribute as much as $19,000 (or $25,000 if you are age 50 or older). Remember, these are your contribution limits and any employer match would be in addition to this. You might also consider contributing to a Roth IRA. For 2019, you can contribute as much as $6,000 (or $7,000 if you are age 50 or older). Finish the year strong by investing in your future!

3. Use Up Your Employee Benefits

While every employer has different rules that apply to the benefits they offer their employees, many benefits expire or reset at the end of the year. You work hard for these perks, so be sure to use them!

Medical and Dental Benefits

At the beginning of 2019, did you have good intentions of taking care of some dental work, blood tests, or other medical procedures lingering on your to-do list? Now’s the time to take advantage of all your healthcare needs before your deductible resets. Dental plans in particular often have a maximum coverage amount. If you haven’t used up the full amount and anticipate any treatments, make it a priority to set an appointment before December 31st.

Flexible Spending Account

Like your health insurance benefits, you’ll want to use up as much of your FSA (flexible spending account) dollars as possible by the end of the year as possible. You are only allowed to carry over $500 to the next plan year. Check the restrictions on your account to see what the money can and cannot be used for, and take care of any needs you may have as allowed by your plan.

Sick and Vacation Time

Depending on your company, your sick or vacation time might expire at the end of the year. Check with your HR department to learn about any expiration dates. If it does expire, fit in a last-minute vacation or even a staycation. If you need to make any trips to the doctor in the near future, schedule those appointments now to make use of these benefits before you lose them.

4. Be Sure to Update

Your estate plan and insurance coverage, that is. If you have taken the time and energy to create an estate plan, you’ll want to check in periodically to ensure all the documents are up to date and no major details have changed. Any significant life event is a good time to think about updating your estate plan documents. If you change any of the beneficiaries in one place, such as a life insurance policy, make sure that they are consistent with the other documents so that there is no confusion.

Your insurance needs may have changed as the year has gone on, which is why it’s important to regularly review your insurance coverages and your designated beneficiaries to make sure they are up to date and reflect your current financial situation. For example, if you’ve paid off debt and your youngest child has just graduated from college, you may not need as much life insurance coverage since your family’s needs and liabilities have decreased. You might also want to evaluate your need for other types of insurance you may not currently have, such as long-term care insurance.

5. Make the Most Of Your Generosity

If gifting is one of your long-term financial goals, it’s never too early to start planning for the legacy you want to leave your loved ones without sharing a good portion of it with Uncle Sam.

Each year you can gift up to $15,000 to as many people as you wish without those gifts counting against your lifetime exemption of $11.4 million. If you’ve yet to gift this year or haven’t reached the $15,000 limit for a particular recipient, make sure you do this by December 31st.

If you’re planning to itemize deductions on your 2019 tax return, be sure to make your charitable contributions before the end of the year. This includes donating appreciated securities, which may help you avoid paying taxes on the gains. Along with your other tax documents, find and organize any receipts you have from donations to charities, whether made in cash, as a securities contribution, or another type of gift.

Need Help Getting Started?

Which of these steps do you need to take before the ball drops on New Year’s Eve? Our team at Cypress Wealth Services would love to help you finish the year strong and set you up for a successful 2020. Contact one of our offices today to get started.

 

About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services is uniquely qualified to serve a broad range of client needs, and their experience and expertise act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With offices in Palm Desert, CA, Tustin, CA, and Anchorage, AK, the firm serves clients across the country in Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit www.CypressWS.com or call 760.834.7250.

 

(1) https://vitagene.com/blog/most-popular-2019-new-years-resolution/