Every year I look at my clients’ financial situation and suggest yearend ideas to save money, taxes or revue of their estate plans. Here are three of the numerous topics we go through.Rebalance your 401(k): A good asset allocation will protect you from market ups and downs, but you still need to keep tabs on that nest egg. The “set it and forget it” nature of 401(k)s makes automatic saving easy. No less than once a year, though, check to make sure that your allocation percentages remain consistent with your overall plan. The market makes it necessary: Some assets or investments will grow faster than others – energy stocks have soared in recent years, for example – changing the composition of your portfolio. A good rule of thumb is to rebalance if certain asset classes get more than 10 to 15 percent out of whack. Rebalancing may also help improve your returns – and reduce your risk – by forcing you to cut back on hot-performing assets, which have a way of falling as abruptly as they rose. Avoid the temptation to make wholesale changes based on your view of the market environment. You’re just chasing performance at that point, chasing something that is history. Stick to your asset allocation targets. If you aren’t happy with them, discuss your goals and risk tolerance with your advisor.Your estate plan: The National Association of Estate Planning Attorneys studies concerning estate planning have shown that more than 80 percent of Americans have no estate plan. If you are one of the 20 percent, you may think you’re prepared, but dividing up your assets upon your death is only the first step in protecting yourself and your family. Most people need some sort of will; everyone needs a living will or health care proxy and health care power of attorney, which direct caregivers should you become unable to make decisions. Working through those issues can be difficult, but having your estate paperwork based on outdated thinking can be disastrous.Review your will and add any new property, and check that your giving plan remains workable. Very important: Make sure that your guardianship plan for your kids still makes sense. Have your feelings about your own end-of-life care changed? Is the advocate you’ve designated in your health care power of attorney still the correct choice? Share any important new thoughts with your loved ones. You can also visit nolo.com, an excellent online resource for all aspects of estate planning that offers free advice and sells helpful books and software.Increase saving: Take advantage of contribution increases in your qualified plans to beef up your savings. The maximum amount that workers under age 50 can contribute to their 401(k)s rose this year to $15,000, up from $14,000 last year. If you’re 50 or older at any time this year, you can set aside a total of $20,000, up from $18,000 last year.But the big news this season involves cash. It’s a real asset class again. Are your cash dollars earning between 1 and 3 percent? There’s no reason anybody should be earning less than 4 percent in a cash or money market account. Hunt for options for your short-term cash at www.bankrate.com, a great resource for money concerns.Colorado Comprehensive Wealth Management719-886-3377Registered Investment Advisory RepresentativeSecurities America Advisors Inc.Member NASD, SIPCFor more information, visit www.donnellservices.comColorado Comprehensive Wealth Management and Securities America Advisors Inc. are independent companies
