Summer is officially be here, but before all the vacation planning you did begins to come to fruition, it can be a good idea to take stock of your financial picture and make updates where necessary. Below are a few things you should consider to keep your plan in shape. We’ve organized them by life stage, from having small kids to being closer to retirement. We’ve also included charitable giving, as that happens at every stage.

College Savings Plans

If you haven’t started one yet – the sooner you get saving, the better. You can fund a 529 plan with up to $16,000 per year and still qualify for the annual gift tax exclusion – but you can also fund five years at once if you’re behind and want to catch up. If you have a 529 plan set up, it’s a good idea to revisit your allocation as your child gets closer to college age, to make sure you’re not taking too much risk.

Risk Management

Life insurance is critical to keeping your family’s lifestyle and goals on track. For most people, a term life policy offers the ability to cost-effectively replace your salary during your prime earning years. The rule of thumb is the policy should be 5-10 times your annual pre-tax income. It may also be time to think about an umbrella liability policy to protect your assets over and above your existing coverage.

Retirement Savings

Volatility in the markets has increased and is likely to remain elevated. If you’re within ten years from retirement, you may want to revisit your asset allocation and potentially dial back the risk.
If you turned fifty during the last six months, you are now eligible to make the additional “Catch Up Contribution” to your IRA or 401(k) of $6,500. This not only adds significantly to your retirement savings, it’s a good way to lower your tax bill in the year you make the contribution.

Long-Term Care Insurance

It’s generally sooner than you think to start thinking about long-term care insurance, either for your parents or yourself. Since policies are basically impossible to get once you need the insurance, it’s better to have a plan a place at a younger age. It’s also less expensive. Long-term care insurance is more customizable and offers a lot more options now, so finding a plan that works for your situation can be beneficial.

Charitable Giving

If you haven’t yet sorted your plan for charitable giving for 2022, the slower pace of summer can be an excellent time to think about what is meaningful to yourself and your family and where you would like to see your contributions go to make a difference. Come up with a plan now, so you aren’t up against year-end deadlines during the busy holiday season.

Setting up a donor-advised fund allows you to contribute now, but you can postpone the decision of what charities you want to give to. A qualified charitable distribution from a tax-deferred retirement account can allow you to donate and meet your required minimum distribution (RMD) for the year, which can be an advantage in keeping income at low enough levels to avoid the Medicare IRMAA surcharge.

The Bottom Line

Thinking about your financial picture holistically and keeping all the different pieces tuned up is important to make sure you and your family are achieving your goals and staying protected. Taking the time to check in with some of the bigger items before you turn to the lazy, hazy days of summer will have you in great shape when Fall rolls around.

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About

CollabriaCapital, Inc. is a San Francisco-Bay Area fee-only fiduciary financial planner& investment manager providing wealth management services to clients locally and virtually throughout the US.

Paul Saad, Co-Founder at Collabria Capital, Inc, is a CERTIFIEDFINANCIAL PLANNER™ (CFP®) focusing on comprehensive financial planning, personalized investment management, and equity/variable compensation.

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