Financial planning resolutions and goals for 2024
The new year is a good time to closely review your portfolio and prepare for future events–planned and unplanned– that could impact your finances.
By Jill Garvey, CPA, CFP® Wealth Strategist and Vivian Hairston, MBA Director of Portfolio Management
Most optimism for New Year’s resolutions fade soon after the celebratory confetti is cleaned up. In fact, research shows that only 9% of Americans follow through with New Year’s resolutions†.
However, if you’ve resolved to better understand how your assets can help you achieve your financial goals, developing a comprehensive financial plan will be essential to resolution success.
Every year we recommend clients consider their financial goals and look closely at their assets, income streams and overall estate plans to determine if they’re on track to meet their goals. When reviewed with the help of their advisor, they might have to make some shifts.
As an example, do investment portfolios have the appropriate allocations to various asset classes to maximize returns and reduce risk? As large cap stocks performed well in 2023, is there a need to rebalance portfolios by selling stock and adding to fixed income?
Historical data indicates portfolio diversification reduces risks and enhances investment returns. Now that interest rates are at levels not seen in more than 20 years, does it make sense to pay down debt or build cash balances? A sound financial plan will incorporate long-term growth assumptions and the time needed to reach goals.
"High-net-worth clients with diverse and complex investments could benefit by using portfolio protection strategies such as options or by adding tax harvesting strategies to minimize taxes."
Director of Portfolio Management, Huntington Private Bank®
Goals to consider
Having assets of at least $1 million usually means you’ve been doing a good job with your finances. That’s why performing an annual review of investments is critical.
It’s important for high-net-worth clients to make sure their assets have been titled in a manner that will provide the most tax-efficient income. A comprehensive financial plan will also incorporate estate planning strategies to efficiently pass assets to heirs and support charities of particular importance.
Check your roadmap–are your assets protected?
Take your bearings and determine whether your destination has shifted. Life comes at us fast, and any significant change in your life could impact–and even impede–that journey. So, before the new year, evaluate your roadmap and determine whether any events coming up in the current or next year might warrant a change in course.
Before changing anything in your portfolio, focus on protecting and building wealth in its current mix. Carefully analyze each asset for risk, such as lawsuits, liability claims and others. Fortunately, there are options you can take advantage of depending on your specific financial situation:
- Retirement plans such as a 401(k) or IRA
- Asset titling and insurance, such as an umbrella policy or a malpractice policy
- Foundational estate planning–wills, trusts, financial and medical powers of attorney
- Domestic asset protection trusts
- Offshore trusts
"For my high-net-worth clients, who often hold diverse assets, there are opportunities for even slight changes in behavior to reap rewards."
Wealth Strategist, Huntington Private Bank®
Estate plan updates
Like the batteries in your smoke alarms, the new year is a good time to assess the details of your estate plan and those you want to be involved–beneficiaries, executor, trustee, guardians, and others. Certain events may have occurred or are slated to take place the next year that could impact your plan, such as marriages, divorces, births/adoptions, deaths, relocation, and major sales or purchases.
Of course, there may be events unforeseen, such as a tragic accident, that could prompt the estate’s proceedings. Unfortunately, 67% of surveyed adults don’t have estate plans§, thus leaving what happens to their assets up to others including local governments.
An estate plan also should include a will, financial and medical powers of attorney, revocable trusts, and other documents that could ease a family’s difficulties during a time of loss.
Maximizing investments: review and rebalance
Take a close look at your investment allocation to ensure a balance of securities appropriate for your unique situation and rebalance as necessary. As referenced above, life changes (major purchases, family-related events, inheritance) or economic volatility could require a shift in asset allocation.
When nearing retirement, discuss with your advisor what might be the mix of stocks and bonds right for you. This once could have been considered a high proportion of stocks, but women and men reaching 65 now face living–and therefore spending–another 19 and 16 years respectively‡.
Another possible New Year’s resolution to think about is maximizing Health Savings Accounts (HSA):
- Contributions to HSA may be tax free, which can reduce your taxable gross income
- All interest/gains in the HSA are tax free
- Withdrawals are 100% tax free
Maintaining or saving for retirement
If your retirement savings and investments are on track, good for you! However, see if you can save more in tax-advantaged accounts such as IRAs and 401(k)s. And retired or not, if you’re approaching 73 or already celebrated that milestone, you may be required to take required minimum distributions (RMD) annually from an employer-sponsored retirement plan, traditional IRA, SEP, or SIMPLE individual retirement account. Remember that account holders must begin taking RMDs by April 1 following the year they turned 73, thanks to SECURE 2.0 Act of 2022¶.
Charitable giving strategies
Consider donor-advised funds or private foundations when thinking about your charitable goals.
Other possible donations could include appreciated property and qualified charitable distributions (QCD), which is a tax-free donation from your IRA. What’s more, QCDs can be applied as an individual’s RMD and can be deducted from your gross income.
If you had a successful year, perhaps take your interest the next year to another level. Depending on your circumstances and charitable donations, you could deduct up to 60% of your adjusted gross income (AGI). But you might be limited to 20%, 30%, or 50% of AGI depending on the types of organizations to which the contributions were made, the kinds of property contributed, and the amount or value of the donated property.
We can help
The new year is a good time to take stock of your portfolio and prepare for what events might occur that could impact your finances. To learn more, please contact your Huntington Private Bank team to see how we can help or find a Huntington Private Bank office near you.
† Batts, Richard. 2023. Why Most New Year's Resolutions Fail. February 2. Accessed October 24, 2023.
‡ Social Security Administration. 2023. Actuarial Life Table. Accessed October 24, 2023.
§ Konish, Lorie. April 11, 2022. 67% of Americans have no estate plan, survey finds. Here’s how to get started on one. CNBC. Accessed Nov. 6, 2023.
¶ U.S. Securities and Exchange Commission. 2022. SECURE 2.0 Act of 2022 Title I – Expanding Coverage and Increasing Retirement Savings. Accessed Nov. 6, 2023.
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