7 Tips for Financial Planning in Sacramento

The best financial advisors in Sacramento have at least one thing in common: their belief that there are fundamentals of financial planning that people should follow. Here are seven fundamentals that could help you reach your financial goals.

Maximize Your Retirement Savings Options

Your age and employment status (e.g., employee, business owner) are two major factors in determining which types of retirement plans you are eligible to enroll in and the maximum annual contribution you can make.

Age also determines when you can begin withdrawals from your retirement account without costly penalties and when you must begin taking required minimum distributions (RMDs).

Contributing the maximum amount allowable to your plan each year can help create a retirement that is everything you’ve envisioned it to be. Once you reach 55, consider taking advantage of the “catch-up” contribution, which allows you to boost the amount you put in your retirement account.

Have Wills and Trusts Completed and Updated

A financial advisor and attorney are two members of your Sacramento financial planning team that can help you make decisions on the distribution of your estate and how to structure the distribution following existing estate tax regulations.

Your team can also help document your wishes for end-of-life concerns and who you would want to handle your financial or health care decisions should you become unable to.

Make it a point to review your documents annually to make sure they remain updated, and contact your team whenever there is a big life change, such as a marriage or new child, that affects your estate plan.

Review Your Insurance Plans

Even though many people equate reviewing insurance coverage with a trip to the dentist, it’s an important component in protecting your hard-earned assets. All of your coverages, from property and casualty to life insurance, should be reviewed annually and adjusted as needed. As your wealth increases, so do your protection needs.

Keep Tax Planning Current

As you know, the IRS continually rewrites portions of the tax code. Their adjustments require taxpayers to react accordingly, and not only be in compliance, but also adjust their strategies to maximize the tax advantages and minimize the tax liabilities.

If you are uncertain how tax rules affect you, consider talking with a financial planner whose services include tax planning. They can create a long-range financial plan to help keep as much of your hard-earned money as possible in your pocket. They can also collaborate with your accountant to make sure they have up-to-date documentation for tax returns and other filings.

Maintain an Adequate Emergency Fund

Life has a way of throwing unwanted financial changes at us when we least expect them. Events such as being downsized or having compensation reduced can hurt our financial health as we adjust to the changes that have occurred.

Having six months of living expenses in a readily accessible savings account can give you peace of mind, knowing that you are in a position to meet your financial obligations, as well as minimizing the painful lifestyle changes that may need to be made.

Have Appropriate Investments

The amount of investment risk that you can, and should, be exposed to will change as you age. The closer you get to retirement, the less time you have to recoup losses from unexpected market changes.

You should periodically asses your risk tolerance and invest accordingly. If this is a task you would rather forgo, then consider working with a financial advisor who can manage your investments for you.

Meet at Least Annually with Your Financial Advisor

The one constant in life that we can always count on is change. As time marches on, expenses change, incomes change, tax laws change, family situations change, health changes—the list goes on.

Managing your finances through this sea of changes over a lifetime by yourself is a trip that you may not want to make alone. Working with a financial advisor can provide a partner for the journey with the expertise to adjust your financial strategies according to your life transitions.

Meeting at least once a year with your advisor is important to your overall financial well-being. Just as it’s advisable to see your doctor annually for a physical examination, it’s also a smart financial move to review your financial plan with your advisor regularly.

If you are wondering what type of financial advisor to work with, we would recommend a fiduciary, fee-only advisor who puts your interests first and gets paid no commissions. Pay attention to credentials and service offerings to help find an advisor who matches your needs.

Schedule a complimentary, 15-minute call with a fee-only financial advisor today to discuss your personal situation.

This material was prepared by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax or legal advice.