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Endings & Beginnings: Performing a Year-End Financial Review & What to Expect in 2022

It is hard to believe that another year has flown by. Who would have thought that we would still be amid a global pandemic, let alone in the second year of a confirmed bull market, post pandemic meltdown and market lows of late March 2020? If we have learned anything over the past couple of years, it is that the foundations of a well-constructed financial plan can save us from ruin when things around us start to crumble.

So how do we lay this solid financial foundation as things seem to change constantly around us? Evaluating your financial picture at the end of the year may reveal opportunities or areas for improvement that you hadn’t considered throughout the rest of the year.

Take this time at the end of 2021 to address your portfolio and your overall plan.

  • Make sure your short-term and long-term sources of funds and investments are in place and where they should be: As an investor you should be considering how the past and present quarters have been performing. The balances in your investments is important to consider especially if you are going to need to draw on these funds over the next year.
  • Review your current insurance policies: Evaluating your health, liability, life, and long-term care insurance policies is an annual review must. Make certain to review and update your beneficiaries, especially if you have had major life changing events such as a death, job change, divorce, or updates to your trust/will.
  • Rebalance your portfolio: Overconcentration can easily happen when the markets fluctuate and start to switch up investments to capitalize on opportunities in a changing market. Life changes can also dictate whether a rebalance is warranted or not.
  • Assess your tax liability for the coming year: Before the year ends it is always a good idea to evaluate the upcoming tax season and if you need to make any tax-smart moves. Consulting with your tax advisor now is a great way to avoid any surprises come April.
  • Consider any December 31st deadlines: Did you fund your 401(k)? Planning on funding a college savings plan such as a 529 education account? Are you certain all your Required minimum Distributions have been taken? By no means is this an exhaustive list but be sure you make any year end moves before the ball drops in NYC.
  • Review your financial sources: Whether you do your own research or rely on experts, be sure you review your sources of information and make sure the guidance you receive is to your portfolio’s benefit.

While we can’t see into the future and make exact predictions, there are some recent changes that we know will impact our finances at the beginning of this year. Changes to programs like Social Security, Medicare and retirement contributions will affect how much you can save during the upcoming year and the amount of money you’ll have during your retirement.

2022 Social Security Changes

2022 Medicare Changes

2022 Retirement Savings Changes

What is the Takeaway?