Annual Financial Assessment

[MarkBarbieri]

What annual financial assessments to do you do?

I do the following. In November, when we have to sign up for our annual employment benefits:

1) Review our life, health, and disability insurance and adjust as needed.

Near the end of the year, I do the following:

1) Recalculate how much I need to save for the kid's college savings based on my current balances and what college currently costs.

2) Do some estimates on what my retirement income would look like at different retirement ages and savings rates. I make some tradeoffs between how early I'd like to retire, how well I'd like to live in retirement, and how much I feel like saving today. Then I adjust my savings.

3) I look at my total portofolio and, if necessary, work out a plan to rebalance it .

4) Assess our overall financial situation to see if we need to adjust our emergency fund, adjust our savings rate, etc.

What do you do? What changes have you made during the last year?

We started a Health Savings Account to build up some tax advantaged health care savings.

We opened a traditional IRA for my wife last year in anticipation of being able to convert it to a Roth in 2010 when the conversion income limits go away. I sure hope they don't change the rules on that option before then.

We started a program of aggressively paying down our mortgage last year to get it paid off before our ARM starts adjusting in 2010. I felt really stupid taking a lot of money out of the stock market and paying down a 4.5% mortage, but it ended up working out surprisingly well. Now I just wished I'd done even more instead of doing it in phases. Oh well, hindsight has a way of always making me look stupid.

 

[golfgal]

We sit down with our planner and run some computer models looking at our current and future situation. It is a great tool and keeps everything on track. One thing you may not be aware of (any maybe you are) if you are only carrying disability and life insurance through work, you may not be covered very well. Our disability covers 60% of our current income, however since it is paid for by our employer all of the benefit is TAXED so we would really net out with about 35%--which we can't live on (I don't know anyone that could). We have private policies in place to augment that. They are relatively inexpensive too. Same with life insurance, there is no guarantee that will be around when you need it, we have private policies for that as well.