Tips for a mid-year financial checkup

Financial Planning

If you’ve taken the time to create a financial plan, it’s important to keep in mind that change is a constant. Economic shifts and market volatility have an impact on your financial health. So can changes in your own life.

Your financial plan needs to be just as dynamic. A mid-year checkup gives you a chance to reflect on what’s taken place so far this year – in the economy, with your investments and with your own life and financial goals.

“My experience working with clients is that changes happen all of the time,” says LeAnn Erenberger, Wealth Management Advisor for U.S. Bancorp Investments, an affiliate of U.S. Bank. “It might be something new with your employment situation, a death in the family or developments that affect your children. There’s a lot to consider.”

“I liken it to maintenance work on your home or car,” says Jason Stamm, wealth management practice leader at U.S. Bank. “You want to insure everything is running smoothly. Good maintenance practices will extend their lives, and this is true of a financial plan as well.”

6 areas to review in your mid-year checkup

  1. Check on your financial goals. Your goals are subject to change. Perhaps a child has altered plans for college. Maybe your retirement date is affected by changes to your work circumstances or investment portfolio. You may even want or need to add a new goal to your list. This is a time to put more careful thought into whether your goals remain accurate or if you need to update them and make appropriate adjustments to your financial plan.
  2. Assess your investments. It’s important to review investment performance to make sure your portfolio remains well positioned to help you meet your long-term goals. Don’t just base that judgment on recent results, but on how your investments perform over time.
  3. If certain holdings in your portfolio are coming up short of expectations or don’t seem appropriate for your goals, a change may be in order. A rebalance of your portfolio may also be appropriate based on recent market activity. As you review your investment strategy, always be sure you’re comfortable with the level of risk you are taking.

  4. Bump up your retirement plan contributions. Just as your cost-of-living inflates over time, so too should you increase the amount you contribute to your workplace retirement plan or individual IRA account to keep up with the higher costs you’re likely to experience in retirement. A mid-year review is a good opportunity to consider if and how much you can boost your retirement savings. And if you’re 50 or older, make sure you take advantage of catch-up contributions.
  5. Protect your assets. All insurance coverage, including life, health, disability income and home insurance, should be reviewed annually. You want to be certain that any substantial changes in your life are accounted for in your coverage. If your income has changed substantially, life insurance and disability income coverage should be adjusted to account for that. Home values have risen significantly, so be sure your home insurance still covers true replacement costs.
  6. Use this annual insurance review checklist to assess your coverage.

  7. Get ahead of the game on tax planning. Taxes are a constant consideration. “It’s important to remember that the best tax planning is an ongoing effort throughout the year,” says Stamm. Decisions you make now and prior to December 31 will impact your tax returns next April. Also check the amount withheld from your paycheck to cover taxes. If you typically owe money when filing your tax returns, you may want to increase the withholding amount. If you usually receive a large refund, you could cut back the amount withheld and put the money saved with each paycheck to work toward your goals.
    • Tax loss harvesting. This involves selling investments (within taxable accounts) at a loss, so those losses can be applied against capital gains that may be realized from the sale of other investments or that are paid out by mutual funds. “You don’t want to wait until the last minute to take advantage of this strategy,” says Erenberger.
    • Roth IRA conversions. Moving existing assets from a traditional IRA to a Roth IRA can bolster your retirement income strategy. Having assets available in a Roth IRA that may qualify for tax-free withdrawals provides a great deal of flexibility in managing your tax liability in retirement. “I focus on helping clients take full advantage of their existing tax bracket by shifting traditional IRA assets to Roth IRAs,” Erenberger says.
  8. According to Erenberger, there are a couple of other issues to consider as you review your tax position.

    Such a conversion is a tradeoff – the amount you convert will be taxed as ordinary income, but if holding period requirements are met in a Roth IRA, withdrawals are tax-free. “This is a case of managing your tax bracket and only converting an amount that doesn’t exceed the level that would move you into a higher tax bracket,” says Erenberger. Starting that process in the middle of the year allows enough time to develop an income plan for the remainder of the calendar year that properly manages the tax impact of a Roth conversion.

    Get more tax tips for year-round planning.

  9. Review your estate planning documents. Check your beneficiary designations on financial accounts, insurance policies and retirement plans to make sure they’re up-to-date. You may also want to take a fresh look at your will and/or trust to confirm that the beneficiaries named and specifications you’ve laid out are still valid.
  10. If you’re considering gifting money to your children, note that the lifetime estate and gift tax exemption today (more than $12 million per person) is scheduled to fall to approximately half that amount in 2026. You may want to take advantage of the exemption amount now to help reduce potential estate taxes in the future.

“A mid-year financial checkup is like maintenance work on your home or car. You want to make sure everything is running smoothly.”

- Jason Stamm, wealth management practice leader at U.S. Bank

Build confidence in your financial situation

Financial planning now looks a lot different than it might have ten or 20 years ago. “This is no longer an extensive, one-time only process that results in a thick financial planning document that sits on a shelf and collects dust,” says Stamm. “With our ability to aggregate data and the current information that can be at a client’s fingertips, a financial plan today is much more dynamic.”

Stamm says with the technology available to clients today, the review process is much more informative and productive. “We’re dealing with real time information about evolving markets, economic shifts and personal changes,” according to Stamm. With your entire financial picture readily at hand, “it turns into a much more meaningful discussion for all involved.”

By accounting for all that may be going on in the markets, the broader economy, or your own life, a mid-year financial checkup can help affirm that you’re doing all you can to steer your financial life in the right direction.

Learn more about our goals-focused approach to financial planning.

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