Few of us will miss 2020. As the year begins to wind down, it’s a good time to review whether your financial plans still align with your goals. You should reassess your risk/reward tradeoffs, retirement timeline, estate plan, and all the other components of your wealth.
The year 2020 was, shall we say, atypical. Many made significant changes to investments and financial plans during the year in response to the pandemic. With the prospect of better times ahead, your plans need a fresh look to ensure your financial goals are in line with the changing times.
Your portfolio may need rebalancing. 2020 has seen huge moves in the stock market, and it’s not over yet. Trying to pick stocks and time trading in this kind of environment would challenge the most experienced professional. Some were whipsawed by the bear market, locking in losses and missing out on the new bull market. On the other hand, those who maintained a widely diversified portfolio with assets allocated according to risk tolerances may have withstood the volatility and potentially ended up in much better shape. Now is the time to ensure that your portfolio has the right risk/reward balance.
Review your estate plan. Many things can change over the course of a year that may require you to update your estate plan. Review the components of your estate, including your will, insurance policies, trusts, powers of attorney, and special bequests. Your review should include any changes to your designation of beneficiaries, especially if significant life events occurred during the year. Work with your financial professional, tax specialist and lawyer to ensure all aspects of your estate plan are properly coordinated and reflect your current goals.
Retirement plans can change. You went into the current year with certain assumptions about your retirement. It’s quite possible that events in 2020 challenged those assumptions. Your retirement plan may need to be refined to reflect new goals, liquidity requirements, income sources, and changes to your retirement timeline. Nevertheless, it’s important to maintain your overall commitment to your retirement plan and to minimize disruptions due to short-term considerations.
Political uncertainties may roil your tax strategies. Election years can be full of uncertainty, but its prudent your financial planning adjusts with the times. Consider how aggressively you want to shield your wealth in light of any new cost/benefit tradeoffs.
Your wealth management experts should all be on the same page. The last thing you need is for your various consultants (attorneys, CPA, bankers, etc.) to have different views of your wealth management. Call or email me to schedule your annual financial review. Together, we will ensure that all the support you receive is appropriately aligned to pursue a unified set of goals.
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