Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.

The ‘year end’ elements of financial planning | Guest column

  • Tuesday, December 28, 2021 12:17pm
  • Business

With the end of the year fast approaching, we remind clients that now is a good time to review key aspects of their finances.

As financial planners, there are a few things we consider highly important for most people. Tax planning is always at the top of the list. We encourage clients to review realized gains and losses in taxable investment accounts and, if necessary, take advantage of loss harvesting strategies to reduce net taxable gains.

Estate planning can also be important for many clients. Appropriate gifting strategies or transfers should be considered with regard to managing estate taxes. Utilization of the $15,000 annual gift tax exclusion, available to everyone, can be helpful for many people seeking to make non-taxable gifts or transfers for estate reduction purposes.

Making year-end charitable donations can also be helpful in reducing estates as well as reducing income taxes, even with the higher standard deduction amounts. We also encourage clients to assess and maximize contributions to all available qualified retirement plans, such as 401Ks and IRAs, in order to maximize tax deductions arising from their contributions. Also, for some individuals, converting all or portion of qualified retirement accounts (e.g. IRAs, 401Ks, etc.) to a Roth IRA is worth assessing if it makes sense from a tax and/or estate planning standpoint.

Another important element of one’s year-end financial checklist is a review of one’s financial plan. We strongly encourage all of our clients to evaluate their plan at least once a year. There are many reasons why an annual plan review is important. Revisiting the plan annually can be beneficial as tax and estate issues usually come up during the review. In addition, an annual plan review will address changes and updates in spending, income sources, assets, and asset management. Disciplined monitoring of these elements can make or break a financial plan.

The “year-end” element around planning brings up another important aspect of the numerous benefits a financial plan can provide over time. One of the most important benefits includes strengthening the clarity or assessment of financial resource adequacy. In other words, is one on track vis-a-vis their financial resources and spending to achieve the goals of their plan? A financial plan, including an annual review, should impart greatly improved discipline around one’s investments and can help optimize the positioning of one’s financial assets to provide the highest probability of success. Adhering to the investment and spending disciplines within one’s plan has shown to greatly improve the probability of achieving one’s financial goals.

We do a lot of client plan reviews towards year end. It is a great way for most people to enter the new year with confidence. It is never too late to start a financial plan and actually never too early. Waiting is the worst decision particularly if one has concerns, apprehensions, or specific financial problems that could be addressed through a comprehensive financial plan.

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.


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