Financial spring cleaning

Financial spring cleaning

Temperature-wise, spring just isn’t the same here in San Antonio as it was growing up in the Midwest. But even without cool, breezy temperatures, spring still represents an annual renewal. If you’re like me, you feel an increased level of energy and excitement. You may be thinking about translating that energy into a round of golf or diving into spring cleaning. While I’d usually opt for the former, here I’m going to suggest you focus your energy on the latter – more specifically, spring cleaning your finances.

Review your beneficiary designations. If I had a dollar for every client I’ve worked with who had outdated beneficiaries on their life insurance, IRAs, investments or bank accounts, I’d be on the golf course all day every day. I’ve seen married individuals with a parent or sibling as their beneficiary, divorced people with their ex as beneficiary, and even people with no beneficiary at all. This spring, ensure that all your beneficiary arrangements reflect your current wishes. 

Update your estate planning documents. Beneficiary arrangements are just one element of a comprehensive
estate plan. Wills, trusts, powers of attorney, living wills and letters of instruction should be periodically updated in accordance with the current law and your wishes. 

Consider your strategy for collecting Social Security. It takes a different skill set to navigate the pitfalls of retirement income planning than it does to build your retirement nest egg. One big decision that may loom is the “when” on Social Security. There’s no one-size-fits-all answer, but generally later is better. With every year you delay to age 70 equating to roughly an 8 percent raise, later can make financial sense. If you haven’t, contact your local Social Security office this spring and start to dig into the details.

Clean out old documents. I’ll never forget venturing into a client’s basement to confront dozens of boxes of cancelled checks and the like. Sure, you need to have a document retention strategy, but this bit of spring cleaning will free up space and ease the burden for someone coming in later to sort out your affairs.   

Check your automatic payments. A few years ago, I was doing some financial spring cleaning of my own. During the process, I found myself examining our wide range of automatic deductions and payments. There was a charge that I did not recognize but had seen before. I just assumed – you know what they say about that – my wife had signed up for something. This time, we were looking at things together and realized it was not a charge either of us had made. In fact, our daughter had signed us up for a movie-of-the-month club. We didn’t receive any movies, but we did pay for nearly a year’s worth of “membership.” As you clean, make sure you’re not paying for services you no longer need or want. 

Build your tax deduction. As you’re conducting your normal spring cleaning, set aside your unused stuff and consider donating at the local Goodwill or other charity. Get a receipt to document the donation, and you may be able to take a charitable deduction when you prepare your 2019 tax return next year.

This spring, clean up more than your garage with a focused effort to fine-tune your finances.

J.J. Montanaro is a certified financial planner with USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.