2011 Financial Planning CalendarMost people are continually seeking to improve their financial lives. To help you do so, we offer this Financial Planning Calendar. Each month we present two "Planning Ideas." However, they are not time-sensitive and generally need not be implemented in the month of the recommendation. Therefore, when you are ready to take some financial planning steps, you can review any of these Planning Ideas and implement any that are appropriate when you are ready to move forward. Financial planning suggestions other than these Planning Ideas are generally related to and best implemented in the particular month in which they are listed (but not necessarily on the stated date). In some cases, the Calendar will indicate that a task must be completed by a particular date (e.g., you must pay real estate taxes not later than December 31 to obtain a tax deduction for that year). Keep in mind that
most of the financial planning suggestions, ideas and dates are of general
application. They may not apply to your particular situation. Therefore,
professional guidance should be sought to help you to determine whether,
how and when to implement any of these suggestions. |
| JANUARY | |
| January Planning Idea No. 1: If you haven't already done so, set up a basic filing system for storing your important documents and records. | |
| January Planning Idea No. 2: If you haven't already done so, prepare a financial plan and a budgeting system for monitoring your income, expenses, assets and liabilities. The information you collect will enable you to start planning for retirement or other major life events. Use last year's information to establish a budget for the coming year. | |
| 31st |
Start getting ready for preparing your tax return for the preceding year. As you receive Forms W-2, 1099 and other tax documents, file them immediately. This will reduce time looking for them later. Request a social security number for any child regardless of age who does not already have one. |
| FEBRUARY | |
| February Planning Idea No. 1: Establish or review your savings plan to begin accumulating assets for your life goals. Professional guidance will be helpful in reviewing investment alternatives. | |
| February Planning Idea No. 2: Establish or review your retirement plan. Explore the availability of deferred compensation programs through your employer, such as 401(k) and 403(b) plans. Begin contributing as soon as you are eligible. | |
| 5th | Compare January income and expenditures with your budget. Make adjustments as appropriate to your February expenditures. Make sure you have invested your planned savings amount for January. |
| 15th | Verify that you have received all necessary forms W-2 and 1099 and a statement showing the year-end balance of IRA and Keogh plans. Contact the appropriate company for any that have not been received. For those that have been received, make certain that the amounts agree with your records. |
| 20th | Gather together all of your tax information. Although taxes for personal returns are not due until April 15, it is best to get an early start since additional follow-up may be necessary. |
| MARCH | |
| March Planning Idea No. 1: If you have young children, review their college planning. Determine the amount you will need to accumulate by the time they enter college. Based on this estimate, establish or review your savings plan. Consider one or more of the tax-favored higher education programs. | |
| March Planning Idea No. 2: Review your home mortgage. Are you paying too much interest? Consider the savings you could obtain by refinancing. Also look into the possibility of making mortgage payments twice a month or adding some principal to each payment to save on the interest cost. If you have other debt at higher interest rates, and the interest is non-deductible, consider paying off these debts with a home equity loan. | |
| 1st | If you were age 70-1/2 last year, and did not take the required minimum distribution from your retirement plans, prepare to take a withdrawal before April 1. Professional guidance will be helpful here. |
| 5th | Compare February income and expenditures with your budget. Make adjustments as appropriate to your March expenditures. Make sure you have invested your planned savings amount for February. |
| 31st | Total up your taxable income, capital gains and deductions for the first quarter. This information can be used to plan your estimated tax payments and perhaps avoid or minimize any underpayment penalties. |
| APRIL | |
| April Planning Idea No. 1: Review your retirement plans. How much have you accumulated so far? How much do you need to retire comfortably at the desired date? Professional advice may be helpful in determining how much you should be saving and what the best investment vehicles are. | |
| April Planning Idea No. 2: Perform an inventory of your non-financial assets (e.g., home, furniture, cars, personal belongings). Compare this inventory to your property insurance coverage. Is your insurance adequate for your assets? You may need a rider to your policy for certain items such as jewelry. If some assets are no longer in use, consider selling them or donating them to charity. You may be entitled to a deduction based upon the fair market value of the assets. | |
| 5th | Compare March income and expenditures with your budget. Make adjustments as appropriate to your April expenditures. Make sure you have invested your planned savings amount for March. |
| 10th | Review planned contributions for IRAs, SIMPLE Plans, SEPs and Keoghs for the preceding tax year. Professional advice should be sought to help you determine the maximum amounts deductible, and whether postponing return filing for the preceding year will help determine the amount and timing of the contribution. |
| 30th | Add the estimated tax payments for the year to your calendar so you don't overlook them later. You might want to attach the payment vouchers to your calendar with a paperclip. |
| MAY | |
| May Planning Idea No. 1: Order a copy of your credit report from one of the major credit reporting agencies. Read the report carefully and report any discrepancies to the appropriate agencies. This not only ensures that the records are accurate, but helps prevent others from obtaining credit in your name. | |
| May Planning Idea No. 2: If your family status has changed recently—you got married, had a child or became widowed or divorced—consider the important new financial considerations that may now come into play. These might include property ownership, providing for children's welfare, post-mortem planning, payroll deductions and day-to-day finances. | |
| 5th | Compare April income and expenditures with your budget. Make adjustments as appropriate to your May expenditures. Make sure you have invested your planned savings amount for April. |
| 10th | Based upon the results of your prior year's tax return, make any necessary adjustments to your tax withholding by completing Form W-4 and providing it to your Employer. |
| 31st | Total up your taxable income, capital gains and deductions through this date. Your tax advisor can use this information to plan your estimated tax payments and perhaps avoid or minimize any underpayment penalties. |
| JUNE | |
| June Planning Idea No. 1: Review your life, health, and disability insurance policies. (You reviewed your "asset" policies in April.) Check with your employee benefits office as to what programs are available. Make certain you have adequate coverage. Consult with your financial advisor as to the appropriate amounts for your age and income. | |
| June Planning Idea No. 2: Review your utility costs for the year. Make certain you are getting the best possible deal where multiple providers are available. For example, obtain competitive quotes for long distance phone service. For other utilities, review your usage to see if any savings are available. Consider the use of annual "budget" plans with the utilities to even out annual payments. | |
| 5th | Compare May income and expenditures with your budget. Make adjustments as appropriate to your June expenditures. Make sure you have invested your planned savings amount for May. |
| JULY | |
| July Planning Idea No. 1: Give thought to your estate plan—to how you intend your assets to be distributed at your death. Federal estate tax may be a factor. Despite the statutory provision for eventual repeal of the estate tax (in the 2001 Tax Relief Act), estate tax will apply for 2006 and for a number of years thereafter (for 2006 it will apply if net assets left to persons other than your spouse or charity exceed $2,000,000.) Professional guidance is suggested concerning ways of minimizing estate taxes and probate costs, so that the maximum amount goes to your desired beneficiaries. | |
| July Planning Idea No. 2: Examine your property tax bills and explore the possibility of challenging the valuation. | |
| 5th | Compare June income and expenditures with your budget. Make adjustments as appropriate to your July expenditures. Make sure you have invested your planned savings amount for June. |
| 20th | Review your investment performance for the first half of the year. Consider reallocating under-performing or low-yielding assets. |
| AUGUST | |
| August Planning Idea No. 1: Review or prepare a "post-mortem" letter to your spouse spelling out the location of your assets and property (assets of a deceased are often lost because a spouse may not be aware of them or know their location), the names of all your advisors, and any other information your spouse should know to minimize his or her burden in the stressful period after your death. | |
| August Planning Idea No. 2: Request a Personal Earnings and Benefit Estimate Statement from the Social Security Administration. This can be done using Form SSA-7004 or over the Internet. (Click here to request statement). This statement summarizes your social security earnings history and provides an estimate of the benefits to which you are entitled. It is important to verify that you have been credited for all of your earnings. You can also use this statement in your retirement planning. | |
| 5th | Compare July income and expenditures with your budget. Make adjustments as appropriate to your August expenditures. Make sure you have invested your planned savings amount for July. |
| 31st | Total
up your taxable income, capital gains and deductions through this date.
This information can be used to plan your estimated tax payments, and perhaps
avoid or minimize any underpayment penalties.
|
| SEPTEMBER | |
| September Planning Idea No. 1: Update your will and the will of your spouse, if you are married. | |
| September Planning Idea No. 2: Discuss with your spouse your respective wishes concerning health care and funeral arrangements. These are not pleasant tasks, but it is important that others know your wishes should you be incapacitated. Create a Living Will to document your decisions. | |
| 5th | Compare August income and expenditures with your budget. Make adjustments as appropriate to your September expenditures. Make sure you have invested your planned savings amount for August. |
| OCTOBER | |
| October Planning Idea No. 1: Review the asset allocation of your portfolio. Increases and decreases in its value can upset the asset allocation that you consider optimal. Should you shift some stock investments into or out of bond investments? Should you shift some funds into tax-free investments? | |
| October Planning Idea No. 2: If your employer has a "Flexible Spending Arrangement," determine the balance left in the plan. Your plan may allow you to carry over a year-end balance for use early in the following year. If you may want to incur discretionary medical, dental or optical costs prior to year-end to use up any balance. If you do not participate in such a plan, find out if one is available at your company. Also find out if you are eligible for a "Health Savings Account." | |
| 5th | Compare September income and expenditures with your budget. Make adjustments as appropriate to your October expenditures. Make sure you have invested your planned savings amount for September. |
| 31st | Total up your taxable income, capital gains and deductions through this date. Estimate the amounts expected through year-end. Determine where you stand, and what steps, if any, you should take prior to year-end to minimize your tax liability. Professional guidance will be helpful here. |
| NOVEMBER | |
| November Planning Idea No. 1: If your estate planning indicates a potential estate tax liability, consider making gifts before year-end to minimize estate taxes. Example: You can give away $12,000 a year ($24,000 if you are married and your spouse elects to participate) to each of a number of donees free of gift tax, thereby reducing your estate tax liability. | |
| November Planning Idea No. 2: Check your frequent flier programs for mileage expiring at year-end. If mileage sufficient for an award is going to expire, request an award certificate. You usually have a year from the date of the award to use it. Then, if the award year is about to expire, you can turn it in for a free ticket. You then have still another year to use this ticket. In this way, you usually can get almost a two-year "extension" for mileage that would otherwise expire. | |
| 5th | Compare October income and expenditures with your budget. Make adjustments as appropriate to your November expenditures. Make sure you have invested your planned savings amount for October. |
| 10th | Estimate your taxes due for the year, and find out what steps you should take before year end. |
| DECEMBER | |
| December Planning Idea No. 1: Consider making charitable contributions before year-end both to obtain the maximum tax deduction and to fulfill any charitable programs or commitments you may have established. | |
| December Planning Idea No. 2: If you need a new car, now is the time to purchase or lease. Frequently, dealers are anxious to clear out last year’s inventory prior to year-end. In making your choice, consider the federal tax (and occasional state tax) advantages for buying fuel-efficient vehicles. | |
| 5th | Compare November income and expenditures with your budget. Make adjustments as appropriate to your expenditures. Make sure you have invested your planned savings amount for November. |
| 10th | Examine your current investments to determine those with unrealized losses. Consider selling those investments to take the loss this year. You can deduct up to $3,000 in capital losses in excess of capital gains. However, do not let the tax savings outweigh the investment potential. You might consider "swapping" for a similar company in the same industry if you like the potential of the industry. |
| 20th | Consider paying tax-deductible expenses prior to year-end. Some common examples are real estate taxes, quarterly state or local income taxes, investment-related expenses, dues. These must be paid by December 31 to obtain a deduction this year. Professional guidance will be helpful here. |
| 31st | Evaluate your progress for the year. How close were you to your budget? Recalculate your net worth. Compare it to the value at the beginning of the year. How did you do? |