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“Have you enjoyed your money?” And other financial planning questions you should ask yourself in 2021

By Paul Parnell

Photo of Paul Parnell

“Have you enjoyed your money?” This is a question I often ask my clients. Too often I see investors who work and save diligently for a lifetime and yet never actually enjoy the fruits of their labor.  

After a year of life in a pandemic, I’m seeing a shift, and more families are taking time to reevaluate their priorities in terms of how they truly want to spend their time and money. Here are some common questions and points of consideration to reflect on for your personal financial plan.

Have you reevaluated any major priorities?

For example, I have clients say they plan to travel more once things open again. Some desire to move closer to family, to downsize, to retire earlier. Sadly, there have been many stark reminders this year that life is short, and our health is never guaranteed.  I see families that are more reflective on leaving a legacy and making significant changes to their trusts to protect their assets.

Any effective financial plan must take these elements into consideration.

Did the pandemic impact your job or career?

Early retirement, a career change, or job loss means impact to employee benefits that are tied to your long-term goals.

Specifically, Cobra was extended again – for at least another 6 months beyond May. This offers the unemployed more time to find new work and maintain their healthcare benefits – an important component of your financial plan. Accordingly, if you’ve lost your job, you may need to evaluate whether or not you can benefit from rolling your 401K over to an individual retirement account.

Volatility in the markets over the last year impacted executive compensation plans. It’s important to reevaluate your stock options, RSUs, or any additional incentives for consequences.

I am also seeing that, for people who have retained their jobs, many have accumulated more cash reserves than normal. If your cash reserve is beyond the recommended 3-6 months of expenses, you should consider shifting some to longer term investments.

Has your risk tolerance changed?

Risk tolerance often changes when you go through major life events. I’ve heard clients say, “Life too short and I want to retire early,” and they are willing to buckle down and live on less in retirement.

Meet with your financial planner and evaluate your current risk tolerance. Is it enough to maintain a high probability of your assets lasting? Cash and more conservative investments like CD’s aren’t paying much of anything these days. With interest rates so low, and plans for new economic expansion, historically this is a time to be more aggressive. Ensure that your portfolio is balanced to meet your future goals.

How might taxes impact your financial plan?

There are likely some big tax law changes coming over the next couple years. This is the time to be looking at tax shelters and maximizing your retirement plans, if you can. At Ballast Advisors, we also have an affiliated CPA practice, so this is a comprehensive service we may offer our clients.  We work with our client’s other advisors—including accountants, attorneys, and bankers—to ensure the seamless execution of your plan.

Capital Gains tax are likely to increase to historical levels, and this is something to be planning for earlier than perhaps you had planned. It’s something to be watching very carefully.

Questions and Answers

Any successful investment strategy requires getting to know our clients- to understand their dreams, goals and create a complete picture of their financial situation. 

Anytime you have major life change or shift priorities – be they personal or financial –your financial plan needs to reflect those changes. It is equally important to update your estate plan. It’s important to consult with your financial professionals to ensure that you are on track to meet your goals, no matter what life brings.

Whatever your passion is – from travel to grandkids – make sure you build in a plan to enjoy your money.

IMPORTANT DISCLOSURES The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice.  Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

 The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request.