Year-End Financial Preparations: The Key to Starting the New Year Right

As the calendar year draws to a close, our lives are often filled with holiday festivities: baking treats, wrapping gifts, decorating, and spending time with loved ones. Amid all this cheer, year-end also offers a natural opportunity for reflection and planning—especially when it comes to your financial health. While it may not be the most exciting item on your “to-do” list, giving yourself a financial checkup is essential to ensure your plans align with your goals and life changes.

This time of year is ideal for addressing time-sensitive matters, such as tax planning or charitable contributions, while also reviewing your financial strategies. Significant life events—such as a career change, retirement, the birth of a child, or the loss of a loved one—can have a profound impact on your financial landscape. These milestones are critical moments to revisit and update your financial plans.

Let’s focus on three crucial areas for a year-end financial checkup: beneficiary designations, asset allocation, and financial documents. Assessing these can help you start the new year on solid financial footing.

Review Your Beneficiary Designations

Beneficiary designations might not be top of mind, but they are pivotal in ensuring your assets go where you intend. At North Main Financial, we frequently encounter clients who haven’t updated their beneficiaries in years, even after significant life changes such as divorce or the death of a loved one.

The most common accounts with beneficiary designations are life insurance policies and retirement plans, though annuities, trusts, and other financial instruments may also apply. Without periodic reviews, outdated information can lead to unintended consequences – for example, an ex-spouse remaining as a beneficiary.

Take time to verify both the listed beneficiaries and their allocations. Review the percentage allocations to ensure they reflect your current wishes if you have multiple beneficiaries. Major life changes are a clear signal to revisit this area of your financial plan.

Assess Your Asset Allocation

The financial markets can be dynamic, with significant ups and downs throughout the year. Whether your investments have seen notable gains or losses, your asset allocation may no longer align with your goals. 

For example, if you’ve invested in domestic indexes or technology-heavy portfolios, you may have experienced substantial appreciation. Conversely, investments in energy or financial sectors might have underperformed. These shifts can throw your portfolio’s balance out of alignment, increasing risk or veering away from your long-term objectives.

Rebalancing your portfolio helps ensure that your investments  remain in line with your risk tolerance and goals. While it may make sense to stay the course with high-performing investments, a periodic review—guided by a financial professional—can help mitigate risk and keep your strategy on track. At North Main Financial, we perform regular reviews with our clients to ensure their portfolios align with their aspirations.

Update Your Financial Documents

Financial documents, such as wills, trusts, and powers of attorney, are the backbone of your estate planning. These documents dictate how your assets are managed and distributed, especially for accounts without specific beneficiary designations.

We often see clients whose documents haven’t been updated in decades, which renders them out of sync with their current circumstances. For instance, as children become financially independent or family dynamics change, your estate plan may need adjustments to reflect these developments. 

Reviewing your financial documents ensures your wishes are honored, and your loved ones are cared for as you intend. Working with a financial planner or attorney can help you identify gaps and create updated documents that align with your present-day needs. 

Conclusion

As the year ends, carve out time for a financial checkup. Start by reviewing your beneficiary designations to ensure they reflect your current intentions. Next, assess our asset allocation to ensure your portfolio remains balanced and aligned with your goals. Finally, revisit your financial documents to confirm they address your current needs and wishes.

These steps may not be as festive as holiday traditions, but they are just as important. A thoughtful review of your financial health now can set you up for success in the coming year and beyond. 

If you have questions about your financial space or would like to review your financial space, call us at (704) 987-1425 or visit us virtually at www.northmainfinancial.com. If you wish to schedule an introductory meeting, we would be happy to meet with you at no cost or obligation to you.

These Blogs are provided for informational purposes only and should not be construed as investment advice. Any opinions or forecasts contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Osaic Wealth.