Things to Review in Your Mid-Year Financial Check-Up

We’re already over halfway through the year, so it’s important to take a step back and look at your financial situation. A mid-year financial checkup can help determine whether you’re on the right track to meet your future financial goals, or if you need to make some adjustments to get back on course.

Let’s look at five things to review during your mid-year financial checkup.

1. Your Financial Goals

Now is a great time to review your financial goals and ensure they’re still relevant to your current situation. Maybe you went through major life changes that forced you to change your goals, or maybe everything is the same as it was last year, so your goals are the same. In either case, it’s essential to assess each goal to ensure that it’s still relevant today.

If you have multiple savings accounts and goals, then revisit each one to make sure that you’re still on track.

Ask yourself:

  • Is my spending aligned with my plan?
  • How can I pare back on expenses?

Review your savings for each goal and consider whether your life situation has changed. If it has, make adjustments as needed to ensure that you stay on track.

One of your savings goals should be retirement. Mid-year is a great time to check whether you’re saving enough to maintain the lifestyle you want in retirement. It’s also a great time to review the beneficiaries of each retirement account and make adjustments as needed. Your designated account beneficiaries supersede the directions in your will, so make sure you’ve named the appropriate individuals.

2. Your Potential Tax Breaks 

It’s important to take steps throughout the year to reduce your tax burden. Mid-year is the perfect time to review and make sure you’re on course.

A few ways to reduce your taxable income are:

  • Retirement account contributions. Aim to contribute enough to maximize the match from your employer.
  • Health savings account (HSA) contributions.

In 2022, you can contribute up to $6,000 to an IRA or $20,500 to a 401(k). If you’re 55 or older, you may contribute more as a catch-up contribution.

Making contributions to retirement accounts and an HSA account can help reduce your taxable income, allowing you to save more money.

3. Your Investments

Investments play an important role in helping you achieve your retirement goals. During your mid-year financial checkup, review your investments with your advisor to ensure they’re still meeting your needs. If they aren’t, advisors can help make adjustments as necessary.

During your review, multiple items will be checked:

  • Cash
  • Bonds
  • Stocks
  • Other investments
  • Risk tolerance
  • Current financial situation

Our affiliated company, BLW Investments, can help you through this process and rebalance your investments to reach your goals. 

Individual investments and their performances will be reviewed, along with assessing your investment mix. For example, if you have mutual funds or stocks, are they performing as well as you and your advisor expected? If not, do they have any future product or service releases that will boost the investment?

Some investments may no longer have a place in your portfolio. An advisor can help you best navigate this process.

4. Your Estate Plan

No one wants to think about their own demise, but it’s a reality that we all need to face. During your mid-year financial checkup, review your estate plan to ensure that you have everything in order. 

Now is the ideal time to review your:

  • Will
  • Health care proxy
  • Power of attorney

If you’ve recently gotten married, had a child, divorced, or gone through another major life change, make sure that your estate plan documents are aligned with your current situation. For example, you may have named your ex-spouse as your health care proxy, but you recently divorced. Now is a great time to update this document and name another person as your proxy.

Make sure that these documents are kept in a safe place and that your loved ones know how to find them. 

If you don’t have any of these documents, now is a great time to start working on your estate plan. Doing so will give you and your loved one’s peace of mind if the worst should happen.

5. Your Insurance Coverage

Life can change in the blink of an eye. That’s why it’s so important to review your insurance plans and coverage to ensure that you’re prepared if life throws you a curveball. 

If you experienced a major life change, such as a marriage, move, or birth of a child, you’ll need to reevaluate your coverage to ensure it’s adequate.

Start by reviewing your life insurance policy. If you don’t have one, now is a great time to consider getting one. If you have a growing family, you may need to increase your policy’s payout.

Long-term care insurance is also worth considering, especially as costs for care continue to rise. In 2021, the median cost of a semi-private room in a nursing home was $7,908 per month. Long-term care insurance can help cover or offset these costs should you find yourself in need of it.

If you don’t already have one, consider a disability insurance policy as well. Even if your employer offers this insurance, it’s a good idea to make sure that it provides adequate coverage for your needs. If you were severely injured and are no longer able to work, would your work’s policy be able to cover your daily needs? If not, consider purchasing a policy that would fill that gap.

It may be a tedious process, but reviewing your insurance policies and coverages can help protect your financial future if unforeseen events occur.

Final Thoughts

Review these five crucial things at your mid-year financial checkup to ensure that you’re on the right track. Your goals, investments, tax breaks, insurance and estate plan all majorly impact your finances and future. Make sure they’re aligned with your current life situation.

If you’re not already, consider working with a financial advisor who will help you stay on course to reach your goals and take emotion out of the equation.

To learn more about how KPN Enterprises can help you with your mid-year financial checkup or to schedule a call, contact us here.