I know, I keep giving you things to do. I just want to make sure you have a successful 2023!
Please review these items:

Evaluate Your Credit Cards
Interest rates have gone up a lot this year, pay your cards off, then, and make sure you do not carry balances next year.

Dive Deep into Your Budget
Look at where you are spending. Are items needs or wants? I have said it in the past, how you spend will have a huge impact on your future.

Review Your Investments
Now is a great time to look at your asset allocation, the performance of your funds, and how much you are contributing to your plans.

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End of year tasks can be daunting, but going over this list is one you should not ignore.
These items will help you move into the New Year with a smile and sense of relief knowing that you have taken care of yourself.

Max out your retirement contributions. The money will go to the IRA or you – which do you prefer?

Look at a Roth conversion if it makes sense from a tax standpoint. Can you pay the taxes on the dollars you convert out of pocket? If so, this may work for you.

Match up Capital Gains with Capital Losses.

Look at all of your insurances to make sure you have the coverages you need.

Fine-tune your budget. How you spend is more important than how you save.

Once you have finished this checklist, you can move on to the holiday checklist with a clear mind!

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1. Avoid selling your investments
It can be tempting to pull your money out of the market when the economy is in a slump. Recessions and market downturns often go hand in hand, and if we experience a recession, there’s a chance that stock prices could fall even further. Any dividends being paid will reinvest on sale that is a good thing.

2. Strengthen your emergency fund
Because downturns are one of the worst times to withdraw your money from the stock market, it’s especially important to have a healthy emergency fund. Ideally, this means having enough savings to cover at least three to six months’ worth of living expenses.

Step back, take a breath, and stay the course. You are investing for the long term.

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Apparently, the Secure Act did not provide enough for us, so there is a part 2. Secure Act 2.0 has not passed yet, but here are the provisions:

Starting in 2023, the age for taking RMDs would jump from 72 to 73. Then, starting in 2030, it would creep up again to 74. And, finally, it would rise to 75 in 2033.

Allowing 401(k) safe harbor plans to replace SIMPLE plans mid-year. Penalty-free withdrawals up to $1,000 per year to cover personal or family emergency expenses.

Additionally, under current law, failure to comply with RMD requirements results in an excise tax equal to 50% of the year’s required distribution amount. New proposals would decrease the penalty to 10% or 25% if the individual promptly corrected the failure to take a timely RMD.

I like these provisions, we have no idea if they will pass or not.

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Last week I lost 5 clients, they were all between 87-92 and had been clients for 30 years. It is always so hard to say goodbye. I met most of these clients when they were getting ready to retire. I have gone through many life-cycle events with them, met their children and grand-children, many of which are now also clients. Economically, we have been through a lot together. There have been 12 market crashes, countless tax law changes, and many different administrations. Through all of this I am touched by the comments from their families as to how easy their retirement lives were.

I am honored to have known them all.

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Q: I know I have to take my Required Minimum Distribution, is there any way I can take that as a tax loss?

A: Sadly that answer is no. Since all of the funds in your IRA have been accumulating tax deferred, you cannot take the distribution as a loss.

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We are half way through the worst month in hurricane season, with one month left to go for this year. As we have recently seen, power can be knocked out quickly, but might not be restored quickly. That is why I want to know how much cash you have stashed?

I have always thought it was important to keep cash, real paper money, in our homes, especially during hurricane season. I think having around $3000 in small bills is sufficient to get you out of an emergency situation, some people think $5000 is better. Regardless, you should have cash in $10’s and $20’s in a safe, accessible place in your home for emergencies.

Keep this in mind, if the corner gas station/convenience store is open on generator power, you will be able to buy provisions with cash. Credit cards or debit cards will do you no good as those systems will be down.

Cash is king in an emergency.

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As part of the Inflation Reduction Act just passed, the IRS is working on a program to file your tax return for you.

Here is what has been proposed:
The IRS will send you a pre-filled return that will show either what you owe or what you will be refunded. If you are accepting of this, simply sign and mail back.

Here are my questions:
What data is being used to calculate the return?
What would happen to me if I do not accept their return?
What if I also do my own return and reach a different result, can I re-file or am I stuck?

Most of my clients only pay around $200/year for their returns to be done by an accountant, I would feel more comfortable with that vs. the IRS doing a return for me.

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Q: We just sold our house but have not found a new one yet. While we are shopping, what should we do with the proceeds from our sale?

A: My rule of thumb is: if you have cash that you will need to use within 18- 24 months, it has to stay in cash. Use a savings or money markets account. You cannot afford to invest the proceeds and subject those dollars to the whims of the markets.

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As I have my regular review appointments the conversations often turn to more than just how their portfolios are doing right now. Recently, one of my retired clients brought up a few points that are worth sharing.

First, he said he would have taken smaller (less expensive) family vacations so he would have been able to save more over a longer period of time. He now shares my advice with his Grandkids, save at least 10% form your very first paycheck for your retirement.

Second, realize that everything will cost more. Sure, there are times when prices go down, but inflation takes a big bite out of your purchasing power.

Third, taxes are forever and will constantly change. There have been a few times during his life that taxes have gone down, but mostly have gone up. Not being prepared for taxes in retirement can take a big bite out of your spendable funds.

Like I said, sage advice.

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