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Spring clean your finances |
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As you're working on a will, also consider drawing up a financial power of attorney document, which specifies a trustworthy
person to control your finances if you become too sick to handle them on your own. A living will, also commonly included in these types of
documents, is helpful to specify your wishes if you're unable to communicate them because of illness.
Once you've finished drawing up these documents, don't just shelve them indefinitely. An annual review remains important,
because when your life changes, the parameters of your will may need to change, too.
"If you had a major life event -- if you had a child, if you got married or divorced, or if a parent died and you inherited
a lot of property -- you'll have different things to think about," says Randolph. "Most people need more than one will in their lifetime." Make
sure you're still comfortable with the executor and beneficiaries of your estate.
If you've made any updates to these documents, get rid of the old ones, says Bob DiQuollo, president of Brinton Eaton Wealth
Advisors. "People have a habit of keeping copies of estate planning documents, even when they have an updated one," he says. "There's no reason
to keep a prior versions, because it just adds confusion."
Retirement accounts and investments
- What to do: Consolidate accounts,
rebalance and update beneficiaries.
- Time involved: Plan to set aside a couple hours to get started, and another hour or two in coming weeks to ensure
that changes have been made.
- Cost: As long as you simply roll over retirement accounts, you shouldn't incur major fees. Some companies charge a
small fee to close accounts, usually less than $50.
- Details: Diligent saving and good investment decisions are keys to helping you build wealth and retire comfortably,
but it's easy to get bogged down with too many details and accounts.
Consolidating accounts is one key to reducing your stress. "It's tough enough to figure out what's going on with your money,
but if you've got several statements a month coming in, you may just let them pile up and not even open them," says Gichon. "It's a huge
obstacle for people when they try to move forward financially."
Gichon suggests moving old 401(k) accounts into the
one at your current job -- check with your human resources department about the
logistics -- or moving them into a self-directed IRA through a major
mutual fund company, such as Vanguard, Fidelity or T. Rowe Price.
"If there's an office for one of these companies nearby, you can
bring the information about all of your accounts and they can help
you make the transfers," says Gichon. "You can get one statement
with all your information with IRA, Roth IRA and 401(k).
It's much easier."
If you're happy with where your accounts are, an annual rebalancing is a smart idea. Even if you planned your initial investments
wisely from the start, big gains or losses over time can skew your portfolio, says Weston. After a few years, your ratio of investments may have
shifted significantly, resulting in a portfolio far more aggressive or conservative than you intended.
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