A common bit of advice for the change of seasons and daylight savings time is to check your smoke detector batteries. It’s a good guidepost on the calendar for ensuring you take this important safety precaution. The end of daylight savings is as good a time as any to check up on your financial preparations as well. Here are the important things to review:
- November is also open enrollment month for many company benefit plans. Your options and premiums may have changed. If you work for one of the many companies who are moving to a high deductible health care plan, check how your deductible has changed. If it has gone up, plan on adding to your savings to cover the difference either in a health savings account, or if that isn’t available, your own emergency savings. If the premiums have gone up, prepare your budget for this increased expense.
- Review your selections in your retirement savings plan. Make sure you are contributing at least enough to get the employer match. If you’ve got an emergency fund and have paid down your non-mortgage debt, increase your contribution. In 2019, you can contribute up to $19,000 if you’re younger than fifty and $25,000 if you are over fifty.
- If you are investing on your own, make sure your allocation is appropriate for your age. A common rule of thumb is to have the amount equal to 110 minus your age in stocks. The remainder should be in more conservative bonds. If you are using a managed account, update your information with the manager, so they can make sure your allocation is still correct. If you are using a target-date retirement fund, you don’t have to do anything.
- Check the beneficiary designation on your retirement account and life insurance. Update them if appropriate. Your beneficiary designation determines who gets your retirement savings and insurance benefits regardless of what other documentation you may have. Do not make your children who are younger than eighteen the beneficiary of either. Minor children cannot receive distributions until they become legal adults.
Other Things to Review
- If you have IRA accounts outside your company retirement plan, review the beneficiary designations on those too. If you plan to make a contribution in 2019, the new limit is $6,000 for those under fifty and $7,000 for those over fifty.
- Review your life insurance. You can calculate how much you should have given your circumstances at Lifehappens.org. Update your beneficiaries on these policies too.
- If you don’t already have disability insurance through work, consider buying your own policy. Lifehappens also has a calculator to help you know what to buy. While most understand the need for life insurance, only about a third of working people have disability insurance. You are much more likely to become disabled than you are to die prematurely.
- If you have a will, a healthcare directive, and medical and financial powers of attorney, now is a good time to review what you put in those documents and update them if needed. If you don’t have any of these, put getting them on your New Year’s resolution list. See my previous article on preparing these documents to help you get started.
Your financial security needs constant upkeep. It’s easy to forget to maintain what you’ve put in place. Calendaring a time of year for a regular review will ensure your important decisions don’t become out of date. Now that the seasons have changed and the sun is going down earlier, review your own financial preparations.