Heading into the end of the year and looking forward to 2023, we here at JGUA wanted to give some insight into some financial considerations for you and your family. Making sure you are aware of and in control of your financial health is important, and we are here to help.

First thing to consider before the year ends is the topic that everyone loves, taxes. One of the biggest things to consider is any required minimum distributions you may need to take from your IRA’s. If you are 72 or older and have a traditional IRA, you are obligated to withdraw a certain amount of money every year. If you don’t, you will suffer a 50% tax penalty for not making that distribution on time. This late in the year, this should be the very first thing you double check and make sure it has been taken care of. Besides this, it would be a good idea to check in with your CPA or whoever does your taxes, to make sure it looks like you’re not missing anything and that there will be no surprises come April next year.

Next, you should make sure that your family is on the same page with any changes or big plans that might take effect next year. Now maybe your 5 year old going to school for the first time doesn’t need to know that you’re planning on buying a new car or that you have little more credit card debt than you’re comfortable with, but your significant other should. Having a united front when it comes to any money problems not only makes it easier to overcome these challenges, but it’s also healthy for your relationship.

One thing that is good to consider at any age, is what kinds of insurance do you have. Being insured against damages is a great way to protect your assets and future. An unknown disaster can quickly deplete your savings if you have to pay out of pocket to deal with whatever it may be. Property insurance for instance would be very important if you live in an area with frequent hurricanes or wildfires. If you are young and don’t have a family yet, life insurance may not be a priority, but the older you get the more it becomes a smart financial decision. The last thing anyone wants is one bad event to wipe away decades of savings.

A more long-term consideration is your progress towards retirement. Take a look at any savings you may have and ask yourself, will you be supported when it comes time to retire? There are benchmarks out there that give you a general guideline for how much you should be saving each year and how much you should have saved, depending on your age and household. For example, if like me you are in your mid-twenties, you should be aiming to save 10-13% of your annual income towards a retirement fund. This includes any money you, your spouse, or your employer puts towards that goal. However if you are in your 40’s and you don’t have any retirement savings, in order to get back on track your savings would need to be much higher to compensate for the years lost. The earlier and more consistent you are at saving, the easier it is to build a plan for retirement.

Additionally, you should be thinking about reviewing your will and any estate plan you may have in place. While it may not be fun to discuss, it is important that you have plans and systems in place to help pass on your assets and your legacy to your family should anything ever happen. Having these things planned out can provide significant cost savings and ease any burden that will fall to your spouse or children.

Lastly, take some time to review any investments you have, especially if it has been more than a year since you have looked at them. Most people participate in a 401K or similar retirement plan, but haven’t paid attention to how that money is being invested since its inception. What made sense back when you first started, may not make as much sense now that you’re 10 years away from retirement.

As it normally goes when it comes to finance, it heavily depends on you and your values. While benchmarks can be a nice tool for comparison, your definition of financial health can be quite different than the next. Consider both your short and long-term goals, and the steps that you need to take to achieve them. If your goal when you retire is to travel the world and experience what it has to offer, you might need more money than anything online is going to recommend. If your plan is to move to Florida and relax, you might not need that much money to support your later years. Reflect on what you want, and use this to guide you towards any changes you want to make going into 2023.