Six Essential End-of-Year Financial Planning Moves

The end of the year is the perfect time to take stock of the past 12 months, your life in general and your future. It’s also a good time to do a check-up of your finances. Doing so helps ensure that you end this year the right way and start the next year off as financially empowered as possible. This month we’ve put together six steps that will give you a good start on your end-of-the-year financial planning.

Step 1: Make an IRA contribution. Technically, you have until April 15th to make an IRA contribution that’s deductible for 2015. Rather than wait, why not make the contribution now so you know it’s done? Remember, if you’re over age 50, then you can contribute an extra $1,000 over the $5,500 limit.

Step 2: Check your life insurance beneficiaries. If you haven’t reviewed your life insurance beneficiaries in a number of years, they may be out of date. Rather than leave your death benefit to the wrong person or leave it in the hands of a probate court, it’s a much better idea to give your agent a call and find out how your death benefit is currently allocated and make any necessary changes.

Step 3: Consider the benefits of an irrevocable life insurance trust. In order to make sure your life insurance benefits aren’t taxable and don’t go through probate, you might want to assign the policy to an irrevocable life insurance trust (ILIT). Because there is a three-year look-back rule, you’ll want to get this done as soon as possible.

Step 4: Take your required minimum distribution. If you have a Traditional IRA and you are 70½ years old, then you may be required to take an annual withdrawal, called a required minimum distribution (RMD). If you don’t take your full RMD by the end of the year, you may face tax penalties of up to 50 percent of the RMD amount, so talk to your advisor today to ensure this is done.

Step 5: Make a plan for post-retirement income. If you have savings in your retirement account you may think that you’re all set to live out your retirement years in comfort. But unless you have a plan to turn those savings into a guaranteed lifetime income, you could easily outspend your retirement savings or lose it through taxes, volatile market moves, and low-interest fixed products that don’t keep up with inflation.

Step 6: Review your universal life insurance policy performance. If you have a universal life insurance policy that you purchased more than a decade ago, it’s a good idea to get an illustration to see how it’s currently performing. Years of a low-interest credit environment have caused some universal policies to underperform their initial projections, which could mean that you need to continue paying premiums longer than you’d initially intended.

Preparation is key to financial security and stability. Talk to your financial advisor about all the ways you can finish out the year on a strong note and get in a position of power for next year.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or products may be appropriate for you, consult with your financial advisor.

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