5 financial focus areas to consider for the new year

Every new year brings a new opportunity to refocus on your priorities, set goals for what you want to accomplish, and start making progress. This is a great time to review your financial picture and take steps to set yourself up for future success in the years to come.

With that in mind, here are five financial focus areas to consider this year.

1. Think about what retirement looks like financially.

How much money will you need in retirement? Knowing the amount needed to fund your nest egg and support your lifestyle in retirement (aka “your number”) will help you set goals and plan better.

A quick way to determine your number is to calculate how much you expect to spend in retirement. For example, let’s say your current spending is $500,000 a year. Once you retire, you believe you can get by on 80% of that, or $400,000, as you no longer have to pay employment income taxes, the cost of commuting, etc. Your investment portfolio needs to be working hard now to generate those funds you will need in the future.

Because your portfolio is such an important part of your financial plan, this is an area where most people will benefit from professional guidance. A financial advisor can help you assess your needs, understand your financial picture, and implement and maintain a plan tailored to your specific situation and long-term financial goals.

2. Do you plan to sell a business or other significant asset this year?

Have you recently sold a business or significant asset, or anticipate doing so this year? If so, this is the time to build a new financial strategy for replacing the income that business or asset generated. An advisor can also help you identify strategies to mitigate tax burdens associated with a significant capital gain.

3. Understand how life-changing events can affect your financial picture.

If you have recently experienced—or anticipate experiencing—a major life-changing event (such as a job change, marriage, divorce, retirement or the loss of a loved one), these events often come with financial complexities that can present a challenge. These challenges may create a financial shortfall that can throw your plan off track. By taking a holistic view, a trusted advisor can help you navigate these transitions and make informed decisions to help you get back on track.

4. Review your investment strategy.

Having a long-term investment strategy in place is essential for your long-term success. A broad-based, globally diversified portfolio is a good place to start. If your portfolio is not as diverse as it should be, it may make sense to reposition your portfolio to improve your asset allocation mix.

A financial advisor can add value by designing a strategy that aligns with your financial goals, reviewing your current investments, and helping you to make adjustments where needed.

Alternative strategies that generate income and lower volatility are becoming a larger part of portfolios for many investors, especially as higher interest rates and inflation continue to cut into returns. For example, one income-generating strategy that is growing in popularity for accredited investors is private mortgage lending.

Ask your advisor if these types of alternative strategies may be the right fit for you.

5. Have a plan.

To create a financial plan with confidence, look for a CFP® professional who is obligated to act as a fiduciary – putting your best interest first – when providing financial advice. Fiduciaries are regulated and required to be completely transparent with their fees and compensation in a way that non-fiduciary financial advisors are not. Greater transparency helps you to understand your true return on investment and maximize your returns.

If your advisor is not transparent about pricing or only recommends proprietary products, created by their employer, instead of presenting lower-cost third-party solutions and strategies that fit your needs, it may be time to look elsewhere for guidance.

Make this the year to make your finances a priority. Be proactive about reaching out to your professional advisors, including your wealth advisor, tax professional, insurance professional and attorney. Get ahead of tax and financial planning, and be ready for a mid-year financial check-in. You may miss out on valuable opportunities if you wait until the end of the year.

Your financial security is critical in the pursuit of a long and fulfilling life, so invest the time in planning for your future.

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This article is provided by Kaufman Rossin Wealth, LLC, an SEC registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. The Firm can only conduct business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. This article is provided for informational purposes only and should not be considered personalized financial advice. Investors are encouraged to discuss any questions they have about the contents of this article with their financial services professional.