Step 3: Check Your Insurance Needs

Category: Finance, Financial Planning.

With the beginning of a new year, it seems everywhere you turn you hear something about self- improvement. What about your finances?

There are plans for weight loss, quitting smoking, exercise regimens, going green and more. Even if you think your finances are in" good shape" , everyone could use a little" tune up" to make sure everything is running smoothly. There are some very simple steps you can take that can make a world of difference. And it s not as hard to do as you think. Step 1: Check your beneficiaries. all of them. Assets with beneficiaries include life insurance policies, retirement accounts and annuities.

A beneficiary is simply who will receive a given asset when you die. Even bank and brokerage accounts have a feature called P. D. or T. Many people forget who they listed as beneficiaries, and when they check, are often shocked to find ex- spouses, deceased relatives or estranged family members listed. D. , which stands for payable( or transfer) on death. Do yourself and your loved ones a favor and make sure your beneficiaries reflect your current wishes.

If you don t have any plan in place for distributing your assets at your death, by all means put one in place now. Step 2: Check your Living Trust and/ or Will. If you have a plan, make sure it s up to date. For instance, have you purchased a vehicle recently, or maybe a vacation home or time share? One of the biggest mistakes those with Living Trusts make is forgetting to keep all their assets in their trust. Made any new investments? Whether you have a Living Trust or a will, be sure there aren t changes you need to make.

If so, be sure they are registered under the name of your trust. Perhaps you have new grandchildren or there has been a divorce in the family. Powers of Attorney might not be up to date. Your designated executor might no longer be the one you desire. Step 3: Check your insurance needs. If you ve recently been blessed with children and/ or your once income- earning spouse is now home with the kids, you might need increased income replacement.

Our needs change through life and our insurance needs change along with it. On the other hand, if you re newly retired, you might not need as much life insurance as before. Liability coverage might need to increase. You might need more homeowner s insurance if you ve built an addition or have valuable belongings. Your auto insurance might have little uninsured motorist coverage. By raising your deductibles on your home, car and health insurance, you might be able to save some serious dollars.

Step 4: Check your insurance deductibles. And don t be afraid to shop around for better rates. Step 5: Tune up your company retirement plans. With the internet, getting insurance quotes is easier than ever. Are you putting all you can into your 401( k) , 403( b) , etc. ? You should also review and update your portfolio allocation. Are there any company- matching funds you aren t benefiting from?

Is it all in company stock? (Not a good idea! ) Are your funds allocated too conservatively or too aggressively? Step 6: Tune up investment portfolio. And don t forget to check out those beneficiaries while you re at it. The economic climate this year will probably be considerably different than last year. Depending on your needs and your tolerance level you may need to move more money to international or more money out of the markets and into fixed. That means that you may need to adjust how your portfolio is allocated.

Asset allocation isn t something that you want to set and forget. For instance, if you are recently widowed and your spouse handled the finances, maybe you want to enlist the help of one of your adult children. You may also want to consider who you need to share your financial and estate plans with. If you ve named someone as your successor trustee or your medical power of attorney, you might want to discuss your desires. And while our new weight- loss diets might be hard to maintain over time, these financial tune- up steps usually only need to be done once a year. These are by no means the only ways to tune up your finances, but doing even just one of them can make a positive impact.

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