5 Step End of Year Checklist / Rocket Insurance.US

5 Step End of Year Checklist

We all make resolutions this time of year. Here’s a quick checklist for some financial resolutions.

1. Income Plan
One simple thing you can do to save money is review all of your insurance policies: health, home, life, automobile. Could you make coverage changes that would reduce your premiums? On the other hand, a mistake people sometimes make is not having enough life insurance to cover their spouse and children if something were to happen to them and the family were to lose their income.

Next, if you don’t already do this, create a budget to get a better handle on your spending and saving habits. A simple formula to use is 50-30-20. That is, 50% of your income could be budgeted for fixed expenses, such as car payments and the mortgage. Another 30% could go for discretionary spending, such as new clothes, dining out or taking in a movie. Finally, 20% can be saved.

Then as you look toward retirement, you can begin to get an idea of how much income in the long term would provide you with financial freedom at a set age.

Check to see if you’re on track to reach that goal. Adjusting for inflation, and based on your investments and the rate of return you should expect, will you arrive at your goal on time, or do you need to start setting aside additional money?

 2. Investment Strategy

Most people are taking greater risks with their investment portfolios than they realize. Maybe you’re one of them. Make sure your risk exposure is in line with your risk comfort level. The market has reached all-time highs this year, and we’ve had a lengthy bull-market run, which perhaps has lulled some people into a false sense of security.

Many people—maybe most—aren’t fully aware of just how much they could lose if the market suddenly took a turn for the worse. And here’s the thing, if you lose too much—more than your risk comfort level can bear—there’s a higher chance you won’t stick with your strategy. Suddenly, you’ll be selling low after having bought high.

Also, make sure you’re earning the appropriate level of return for the risk you’re taking. Even the most daring investors don’t want to take enormous risks in exchange for measly returns.

Finally, take the time to review your investment fees—both disclosed and hidden. If you aren’t careful, fees will chip away at your returns, costing you a bundle over time.


Review your tax return from this past year with the goal of reducing your future taxes. After all, the more you pay to the government, the harder it will be to attain financial freedom.

So take your last tax return and review it line item by line item to see if there are potential savings. On line 8, for example, you record your taxable interest. Ask yourself if you’re spending money from the account that’s generating that taxable interest. If you don’t have immediate need for that cash, perhaps you can allocate it to a product where the interest would be tax exempt.

4. Health Care

If you’re still in the workforce, make sure you have the appropriate health care for your family. What are your deductibles? Are you able to get dental and vision coverage through your employer? Also, consider whether you have more coverage than you need. There could be potential savings as you review the particulars of your coverage.

If you’re moving toward retirement, you want to consider that eventually you may have a need for long-term care, such as a nursing home or an assisted-living facility. Review the options to prepare yourself financially for that need. Should you purchase long-term care insurance? Do you want to self-insure? Like it or not, many people do end up in long-term care, and that can deal an enormous blow to your finances.


Many people hope to pass on a legacy to their families. The end of the year is a good time to review your trust documents with a licensed attorney and make sure they accomplish what you want.

Who did you put in charge as trustee? Are all your beneficiaries listed with the correct percentages that you want to leave to them?

Similarly, review the beneficiary-designation forms for your life insurance, retirement plans and other accounts to make sure the primary and contingent beneficiaries are correct. Perhaps there has been a change in your situation—a divorce and re-marriage, for example—since you originally listed the beneficiaries. Make sure these documents reflect your true intentions.

Essentially, reviewing these five areas will help you answer one basic question: Am I on the right track?

It’s important that you be able to answer that question with a resounding “yes!”

To read more visit: Kiplinger

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About the Author Dan Keil