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Financial planner recommends yearlong approach By Tony Boom Jan 08, 2023 12:15 AM A A The new year is a good time to review your financial situation, but there are tasks all through the year that can keep your finances on track. [123rf.com] A Medford independent financial planner says the beginning of the year is a good time to look at your financial situation, but he adds the process should be ongoing throughout the year. Mason Carhart, who earned both a bachelor’s and a master’s degree in economics from the University of Oregon and works through Lighthouse Financial Planners and Advisors, recommends breaking the year into three time periods, with various assessments occurring in each. “Keep an eye on things and actively participate in your finances” is the advice from Carhart, who grew up in the Rogue Valley and is a graduate of Crater High School. “A lot of this is really common sense to me, but it may not be for others.” One action during the first part of the year, which runs to the April 15 tax filing deadline, it to set an annual budget. “Creation of a general budget for the year can be made early to take into account both regular expenses and other items. If you want to go to Disneyland, we need to account for that,” said Carhart. Other items, such as new landscaping or a vehicle purchase, should also be put into a budget. For clients without regular work income, such as retired individuals, making sure cash will be available for expenses is important in budgeting for the year ahead, said Carhart. Tax preparation will be going on at the start of the year and affords a chance to look at finances, said the planner. In some cases, contributions to retirement accounts for the previous year can be made early in the current year before the tax filing deadline. Mason recommends checking with tax professionals for individual questions on what contributions might help with taxes. After the tax season, a middle period comes to the yearlong process. “This is the time of the year you just do financial general housekeeping. Are you consistent with the budget and being consistent with your spending habits?” said Carhart. “If you are not, then you need to make adjustments.” If someone comes into money, or the budget has a little surplus, it might be time to consider adding to retirement or other accounts, said Carhart, who helps teach a first-time homebuyer’s course through ACCESS and this spring will teach an economics class for Southern Oregon University’s Osher Lifelong Learning Institute. Other midyear housekeeping items can include making sure the beneficiaries identified on polices, accounts, trusts and wills are the people you want proceeds to go to in the event of death. “If you had a divorce, are things the way you want?” asked Carhart. He recommends checking beneficiary listings annually. Keeping powers of attorney up to date, or establishing them, is a way to make sure the bills are paid in the event a person becomes incapacitated, said Carhart. Medical directives could also be reviewed during the middle-year period, he said. Insurance reviews are another item that should be done annually. That can include home, auto and life insurance, but also specialty insurance. “Are you shopping and getting good coverage?” Carhart asked. “People don’t think about insurance policies, and they can be a big dent on your income.” A third financial review period can start when enrollments open up, usually in the fall. While medical insurance plan enrollments such as for Medicare supplements are common, they also can occur for retirement plans and other arrangements. Review of retirement plans also is a good task to undertake toward the end of the year. A couple with whom Carhart met a few months ago were able to make a contribution to a 401(k) plan after assessment of their situation. “Do retirement plan investments align with goals? If you are going to need cash, you need to be invested in things that make sense for you now, not in the past,” said Carhart. “Is it appropriate for age, retirement date and financial goals? That’s a good, broad list that people should be looking at.” Taking a look at one’s overall life situation also is appropriate at the end of the year. Individuals might consider whether they want to upgrade or change their housing soon, or maybe do that in their twilight years, for example. Taking required minimum distributions from retirement accounts before the end of the year is another activity for the last period. Federal tax law on many types of accounts requires those 72 and older to take distributions or face tax penalties. “People have had it happen. It can just fly by the wayside. People have to keep an eye on it,” said Carhart. Another end-of-year consideration is perhaps selling assets that have experienced a financial downturn during the year. The losses from those sales often can be used to offset taxes. While general tips can help many people, Carhart recommends individuals meet with a financial planner because each person’s situation is different. Reach Ashland freelance writer Tony Boom at [email protected].