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by Eve Kaplan, Certified Financial Planner (TM)


Here are 5 “no-brainer” moves you can make before year-end to strengthen your finances:

  1. Taxes: NJ AND NY RESIDENTS ALERT: If Congress pushes through tax reform that eliminates state and local tax exemptions, many NJ and NY residents (along with MA and CA residents) will be hit with tax increases. One estimate says NJ residents, for example, will need to pony up an additional $3,500 per year in taxes. Look into prepaying a portion of your 2018 property tax by 12/31/17 and front load charitable donations intended for 2018 into 2017. Your financial advisor or CPA can advise further regarding appropriate actions to take by 12/31/17.
  2. Savings: Did you defer the maximum number of dollars in your 401k this year to receive 100% of your company match? Check with your company HR now if you’re not sure. If you have an unattractive 401k or 403b with no match, consider e.g. funding a Roth IRA if your income doesn’t exceed federal caps. The deadline for deferring funds into a Roth IRA for the 2017 tax year is 4/15/18.
  3. Long-Term Care for You and Your Parent(s) – What Can You Both Afford?: Yes, it’s awkward to have “the talk” with your parents about a) where they’d like to live if they can’t care for themselves and b) how they will cover future long-term care expenses. Since most parents aren’t forthcoming about finances with adult children, it’s helpful to loop in a financial advisor to moderate the discussion and provide informed advice. If your financial advisor is a financial planner, he/she can determine if you have sufficient means to cover future long-term care expenses via insurance or savings. Note: promising that you’ll be able to physically take care of your spouse or a parent usually is well-meaning but unrealistic.
  4. About Your Broker or Financial Advisor: How much did your broker or financial advisor charge you this year for his/her services? Schedule an appointment to discuss this, if you’re not sure. Is your advisor a Fiduciary (someone required to put your needs before his/her own)? Or does he/she sell you products that merely need to be “suitable.”  Side note: “Fee-Based” isn’t the same as “Fee-Only” – Fee-based advisors sell products.  I’ve reviewed statements from a Fee-Based advisor that charged a whopping 2% per year (1% management fees AND “C” class mutual funds that generated an additional 1% commission). Stay far away from advisors who recommend you invest in unlisted investments (e.g. gold mines in Ghana or property somewhere)…and avoid investing with anyone who offers you attractive returns.
  5. It’s All About Your Financial State of Health:  A solid financial health assessment not only looks at your ability to cover your own retirement and future medical bills. For example, how are your aging parents doing financially? Will you be on the hook if they run out of funds? Will help to your adult child(ren) jeopardize your own financial future? Information is power and it’s never too late to plot a prudent course of action.

(C) Copyright by Eve Kaplan, 2017. All Rights Reserved.