Mid-Year Financial Check-Up: Key Areas to Evaluate

As we reach the halfway point of the year, it's an excellent time to conduct a mid-year financial check-up. This review ensures that your financial plans are on track and allows you to make necessary adjustments. As a fee-only wealth advisor, we recommend focusing on four critical areas: tax planning, retirement plan contributions and allocation, insurance evaluation and beneficiary and estate plan updates. Let's dive in.

Tax Planning and Evaluating Your Tax Return

Mid-year tax planning can provide significant benefits and reduce your tax liability come April.

Withholding Review: Check your tax withholding to ensure it aligns with your projected tax liability. Adjust your W-4 form if necessary to avoid large tax bills or refunds.
Estimated Tax Payments: If you have substantial non-wage income, ensure you're making appropriate estimated tax payments to avoid penalties.
Tax Deductions and Credits: Identify potential deductions and credits you may qualify for and strategize to maximize them. This might include contributions to retirement accounts, charitable donations, or energy-efficient home improvements.
Deep Dive into Your Tax Return: Analyze your previous tax return to identify patterns and opportunities for tax savings. Consider consulting a tax professional for a more detailed evaluation.

Retirement Plan Contributions and Allocation

Your retirement plan is crucial for long-term financial stability. Regularly reviewing your contributions and asset allocation helps ensure you're on the right path.

Contribution Check: Evaluate your current retirement contributions. Aim to maximize your contributions to employer-sponsored plans like 401(k)s, especially if your employer offers matching contributions.
Catch-Up Contributions: If you're over 50, take advantage of catch-up contributions to boost your retirement savings.
Asset Allocation: Review your investment mix to ensure it aligns with your risk tolerance and retirement timeline. Rebalance your portfolio if necessary to maintain your desired asset allocation.

Insurance Evaluation

Insurance is a cornerstone of financial security. Mid-year is a perfect time to reassess your coverage and ensure it aligns with your current needs.

Policy Review: Examine your existing policies, including health, auto, home, and life insurance. Verify that coverage limits and deductibles are adequate.
Life Changes: Consider any significant life changes, such as marriage, the birth of a child, or a new home, and adjust your coverage accordingly.
Cost Comparison: With premiums going up across the industry, consider an additional quote for your property and casualty insurance. Even a slight reduction in premiums can lead to significant savings over time.

Beneficiary and Estate Plan Updates

Keeping your beneficiary designations and estate plan current is vital for ensuring your assets are distributed according to your wishes.

Beneficiary Designations: Review and update beneficiaries on your retirement accounts, insurance policies, and other financial accounts.
Estate Plan Review: Revisit your will, trusts, and any other estate planning documents. Ensure they reflect your current wishes and consider consulting an estate planning attorney for complex situations.
Power of Attorney: Confirm that your financial and medical powers of attorney are up to date and that the designated individuals are still appropriate choices.

The Wrap

A mid-year financial check-up is an essential practice for maintaining your financial health and achieving your long-term goals. By focusing on these items, you can make informed adjustments that set you up for success in the second half of the year. Regular reviews not only enhance your financial security but also provide peace of mind, knowing you are on the right track. We hope you enjoy your summer and enjoy some time off with family and friends!

Authored by Stephen Blahovec and Michael Rausch of North River Wealth Advisors. We are an independent, fee-only financial planning and investment management firm located in Pittsburgh, PA servicing clients locally and across the country. To learn more, contact us here.

This content is developed by North River Wealth Advisors from sources believed to be providing accurate information. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.