Have you considered these ten financial strategies to help manage your wealth?

With 2023 off to a bumpy start in the financial markets, now’s a good time to review your personal financial plan and be ready for the challenges and opportunities ahead. The following checklist will guide you through 10 key financial, investment, and balance sheet planning items.

1. Take stock of your portfolio strategy

So far, 2023 has seen volatility in the markets and continued uncertainty around fiscal policy, Federal Reserve policy, and economic prospects heading into the second half of the year. A disciplined investment approach focused on sound long-term targets remains an appropriate strategy to navigate today’s environment.

Review your investment portfolio and ask these questions:

• Are my current cash reserves adequate? Do I need to adjust my balances?
• How do my overall portfolio allocations compare to my targets? Are there any rebalancing opportunities to consider?
• Are there any opportunistic alternative investments that may be appropriate in light of recent market activity?

A disciplined investment approach focused on sound long-term targets remains an appropriate strategy to navigate today’s environment.

2. Consider adjusting your retirement plan savings

If you haven’t already made adjustments to your retirement plan contributions, keep in mind it’s possible to allocate more to tax-deferred accounts in 2023. Consider these options:

• 401(k), 403(b), and 457 plan participants can defer up to $22,500 of their wages, with another $7,500 possible for those over 50. Total defined contribution plan limits (including profit sharing, employer contribution, etc.) increased to $66,000.
• You can contribute up to $6,500 to an IRA and an (unchanged) additional $1,000 for those over age 50.
• Those with health savings accounts can contribute up to $7,750 (family) or $3,850 (self-only) and another $1,000 for those over age 50.

3. Optimize yield strategies

As highlighted during the recent turmoil in regional banks, yields on cash and bonds have increased dramatically over the past year. Savers and investors have much better options today to generate yield without taking much, if any, principal risk. For example, brokerage money market funds are yielding significantly more than checking and savings accounts at traditional banks. If you’re considering investments in bonds, it’s a worthwhile exercise to evaluate credit quality, interest rate sensitivity (duration), and taxable versus municipal bond exposure in light of the continually changing market dynamics.

Savers and investors have much better options today to generate yield without taking much, if any, principal risk.

4. Meet with your tax and financial advisors to plan for the remainder of the year

If you weren’t able to coordinate with your tax and financial advisors around the April tax return/extension deadlines, consider meeting prior to fall. These collaborative discussions can help identify strategies to proactively manage any 2023 liabilities.

5. Reaffirm your personal risk management strategy

Review your property and casualty insurance coverages to confirm what’s covered — and what’s not — and determine if any changes are warranted. If you own coastal property, the marketplace could be changing dramatically in your location. Check with your agent to review your coverages and get in front of any potential surprises at this year’s renewal. And don’t forget about your personal umbrella policy; ensure your limits are adequate and all appropriate assets are listed on the coverage such as ATVs, boats, and rental properties.

6. Check on any education funding changes

Education accounts require regular evaluation to ensure projected balances align with the evolving plans of young beneficiaries. Additionally, the backdrop for college costs continues to change. Many top-tier schools continue to push forward with tuition increases while some other institutions are starting to protect enrollment numbers through cost decreases (published or otherwise). Being aware of marketplace dynamics and beneficiary intentions can help you make informed funding decisions.

Also note that the Secure Act 2.0 introduced a potential new planning opportunity for Section 529 plan owners and beneficiaries. Account holders with excess funds in these accounts may have a new option to help beneficiaries fund Roth IRAs starting in 2024. This is an opportunity to continue monitoring.

7. Review your estate planning documents

Dust off your estate planning documents and confirm whether your crisis plan still meets your wishes. The review should include the “who” of your plan, such as:

• Who’s named as:
  • Executor and trustee?
  • Financial power of attorney to act on your behalf financially if you can’t?
  • Medical durable power of attorney to make medical decisions for you if you can’t?
• If you have minor children, who’s named as their guardian and conservator?

If you’re a business owner, confirm that any existing buy/sell agreements remain appropriate in light of current business and ownership dynamics. This review should also include funding considerations.

8. Take advantage of available estate planning opportunities

If one of your priorities involves transferring wealth to manage estate tax exposure, don’t forget the nontaxable “freebies,” including:

• Annual exclusion gifts, the limit for which is $17,000 per person in 2024.
• Medical expenses, which can be paid without limitation if you pay the medical provider directly.
• Education expenses, which can also be paid with no limit if you issue payment to the institution and not an individual.

9. Plan now for sunsetting estate tax exemptions

If your family is considering wealth transfer strategies, you should be actively developing and implementing your plan now as the current estate exemption is scheduled to drop in half in 2026. If you’re considering wealth transfer to minimize future tax bills, timing is important, and you may benefit from doing so sooner rather than later.

This year features yet another large inflation adjustment to the gift tax exemption figure: families that had previously used all their exemption can make additional gifts this year. Check with your advisor.

10. Review your charitable account strategy

Those holding donor-advised funds should check on current balances and determine how much, if any, they want to grant this year. Having a budget in mind helps smooth execution and makes it easier to remember to use these funds throughout the year, as appropriate.

Private foundation (PF) board members may want to revisit investment policy in light of changing forward-looking return expectations in bonds, stocks, and alternatives. PFs that have been more aggressive in recent years to meet return targets in a low-yield environment may have more flexibility going forward than they’ve been accustomed to. These investment policy reviews are also a good opportunity to revisit environmental, social, and governance policies, if desired.

As 2023 evolves, the economy and financial climate continues to be punctuated by uncertainty. Now’s the time to proactively consider the risks — and articulate the opportunities — to ensure your personal financial plan remains current and effective whatever the future brings.