Taking Stock of Your Retirement Finances: Steps for a Successful New Year
Published on December 23, 2024
As we approach 2025, it’s a perfect time to take stock of your finances, reassess your retirement plan, and evaluate your investments. Doing this annual financial check-in can ensure you’re on track to meet your retirement savings goals and make the most of your resources. Here are some steps to take (in between those holiday parties and the gift wrapping) to put your finances on solid footing for 2025.
1. Review Your Financial Goals
Whether saving for retirement is top of the list or other lifestyle objectives take precedent (such as saving for a home, planning a big vacation, or helping your adult kids with major expenses), make your financial goals specific, measurable, achievable, relevant, and time bound. Adjust them as necessary to reflect any changes in your life or priorities.
2. Check Your Credit Report
Don’t get caught by a nasty surprise that affects your credit rating! Obtain a free copy of your credit report from Equifax, Experian, and TransUnion and look for any errors or discrepancies. Credit scores determine the interest rates you are offered or qualify for, fir everything from credit cards to mortgages to auto loans.
3. Assess Your Budget
Creating a yearly budget is always helpful, especially as you are near retirement or are already retired and have a more fixed income. Review your income and expenses over the past year and identify areas that will change (up or down), see where you can cut back if necessary to stay within budget, and assess how much income you can put toward your retirement savings. Speaking of which…
4. Evaluate Your Retirement Plan
Retirement planning is a long-term commitment. Review your self-directed IRA (SDIRA) or solo (k) plan, or your employer-sponsored plan to make sure you’re contributing enough to meet your retirement goals. Consult your trusted advisor to ensure your retirement strategy aligns with your current and future needs.
If you know and understand alternative assets—and want to include them in their retirement portfolio—that evaluation may include opening a new self-directed IRA.
5. Analyze Your Investments
Evaluate your portfolio to see how your investments are performing and diversify to mitigate risks and optimize returns. Adjust your asset allocation based on your risk tolerance and financial goals.
One (big) benefit of investing in alternative assets—such as real estate, precious metals, commodities, private equity funding, and royalties (to name a few) is that these provide valuable portfolio diversification. And, because their performance is not tied to the stock market, they also provide a hedge against market volatility and inflation. Remember that alternative assets are generally long-term, illiquid investments, so make sure the nontraditional investments in your self-directed IRA are in line with your “retirement runway.”
If you have questions about the many alternative assets allowed in self-directed retirement plans, you can always contact the team Next Generation Trust Company or sign up for one of our educational events (or watch our webinars about alternative asset investing and various retirement plan topics on demand).
6. Set Up Automatic Contributions
Deploy this New Year resolution to pay yourself first and avoid the spending temptation. Automatic contributions to your retirement plan or savings accounts ensure they are funded on a regular basis and help you stick to your financial goals.
7. Plan for Taxes
Tax planning can save you a significant amount of money. Review your tax situation and look for opportunities to reduce your tax liability. Contributions to tax-advantaged health savings accounts (HSAs) or education savings accounts (ESAs) can be part of your overall tax AND savings strategies. Also make sure that any distributions you take do not trigger an unanticipated tax event (or be prepared to pay any taxes and/or penalties based on early or other distributions outside of RMDs). Keep abreast of any changes in tax laws that may affect your financial situation.
8. Update Your Insurance Coverage
Do you review your insurance policy renewal documents when they arrive, or do you shove them into a file with just a glance? Read all your policies—health, auto, home, and life insurance—to make sure you have adequate coverage to protect yourself and your loved ones. Make coverage adjustments as needed to reflect changes in your circumstances.
9. Create or Update Your Estate Plan
Anyone with assets should have an estate plan in place to ensure those assets are distributed according to your wishes. Review and update your will, trust, and beneficiary designations (and make sure we have your current beneficiaries designated on your SDIRA documents). Life circumstances and financial scenarios change over time, so you want all your legal documents, including estate planning tools, up to date.
10. Track Your Financial Progress
From monthly statements from your IRA custodian to semi-annual meetings with your advisor, stay on top of your budget, retirement savings, and investment performance and make course corrections as needed to align with market trends or shifts in your retirement goals.
One more step toward a successful 2025: a SDIRA with Next Generation Trust Company
Are you getting the white glove service you deserve from your current self-directed IRA custodian? Is your custodian available to answer your questions and provide client education about alternative assets and self-directed investing?
As a full-service administrator and custodian for SDIRAs, Next Generation has our clients’ best interests at the forefront of what we do. We have 20 years of experience in the self-directed IRA field and are proud of the high level of client service we provide, every day. If you’re looking to make a switch in the coming year, contact us to discuss your needs: NewAccounts@NextGenerationTrust.com or 888.857-8058.
