Broker Check

Annual Financial Physical

January 04, 2022

Consider these financial planning points to help keep your financial plan on track

Every year at this time, it’s a good idea to perform a “financial physical” to help ensure you start the year off right. Here are some ideas to get you started.

Review Your Retirement Saving Goals

It can be difficult to predict what you’ll need in retirement, especially if you’re early in your working career. But generally, plan to replace at least 75% of pre-retirement income.

Even if your retirement is decades away, you or a financial planner, should use a retirement calculator at least once a year to estimate whether you’re on track to reach your goals. An even better way is to use a Monte Carlo calculator to help determine if you’re on track. Your retirement plan sponsor will likely have retirement calculators and other planning tools on their website. You can also check out the interactive retirement calculator at, which includes a digital “retirement coach” that can help walk you through some personalized retirement plan action steps that may help you achieve your retirement goals.

Increase Your Retirement Plan Contributions

While the ultimate goal is to max out your retirement account contributions, don’t stress if you aren’t there yet. Focus first on making sure you contribute enough to receive your full employer match if your plan offers one —otherwise, you’re missing out on free money. Then, aim to increase your contribution by at least 1%–2% each year, working up to saving 10%–15% of your pretax income each year.

Finally, make sure to review current retirement plan contribution limits ($19,500 in 2021, plus an additional $6,500 catch-up contribution if you’re age 50 or older). While you might not have been able to contribute the maximum amount in the past, you may have more to save now.

Rebalance Your Investment Portfolio

Over time, market changes can lead to shifts in your portfolio’s asset allocation. For example, you may have started with a 75/25 stock-fund-to-bond-fund split, but changes in the market caused stocks to now account for 85% of your portfolio’s value. That’s why it’s important to periodically check your asset allocation to see if it aligns with your current strategy.
Keep in mind, you may also want to rebalance to a more aggressive or conservative allocation should your tolerance for risk change.

Consolidate Your Accounts

You may have an orphaned 401(k) or other retirement plan from a previous employer you are no longer contributing to. If you’re employer allows for it, you may be able to roll the funds from this retirement plan over into your current 401(k). Another option is to roll it over into a new or existing IRA. Rolling over the funds from one or more other accounts into one retirement account can help make your financial life more manageable, keep your savings organized and potentially reduce your account management fees. Just make sure you follow transfer or rollover rules, so you don’t get hit with an unexpected penalty or tax bill.

Review or Name Your Beneficiaries 

When you first opened your retirement plan at work, you may have skipped this step. Or you may want to make adjustments if your family status has changed. Make sure your designated beneficiaries align
with your will if you have one. This is one of the biggest mistakes planners see, beneficiaries that don’t line up with a clients Last Will and Testament. In the case of the death of the account holder, the beneficiary choices will be honored regardless of what the Will says. Also, please note that when it comes to employer-sponsored retirement plans, the law requires written consent from your spouse if you decide to name anyone besides them as the beneficiary.

Begin to prepare for your 2022 tax filing

Begin by gathering what you’ll need for your tax preparer.

Here are a few:
• Pay stubs
• Mortgage payment receipts
• Receipts for items you plan to as an itemized deduction
• Mileage logs for vehicles used for business
• 1099-G forms for state and local taxes
• 1099 forms for dividend or other income including gains from stock sales

Hopefully this will provide a basic track for you to run on. In the meantime, please have a safe and prosperous 2022!

Michael P Henderson, CFP® CKA®
Crossover Point Advisors

The opinions expressed in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest you discuss your specific situation with a qualified tax advisor. 

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Crossover Point Advisors, an SEC Registered Investment Advisor and separate entity from LPL Financial.