A Financial Checklist to Keep Your Finances on Track

 David K. Carboni, Ph.D., CFP®

Before major airlines allow flights to depart, their pilots must complete a thorough and systematic checklist.  Not only is this good aeronautical practice, it’s also an excellent way to avoid problems before they arise.  Likewise, employees should periodically complete the Financial Checklist below make sure your finances are in good order. 

□ Create or Update Your Will.  Review your will to make sure: it reflects any changes in your wishes; incorporates additional assets you may have recently acquired; confirms your choice of executor; incorporates any changes in the family (births, deaths, divorces, etc.); incorporates new tax laws (federal and state); and deals with real property you may have purchased, especially out of state real estate.  

□ Create or Update Your Letter of Instruction.  This document, which should accompany the will, is designed to speak for you as if you were still living.  Here you put instructions not easily included in the will, such as: burial instructions; your various accounts, including passwords and pin numbers; contact information of advisors, attorneys, relevant family members, executors, employer benefits  personnel, etc.; safety deposit and key locations; location of important documents, including: life insurance policies, deeds to real estate, and the original will.  

□ Create or Update Your Advance Directives.  These documents authorize others to act in your behalf if you become incapacitated.  The holder of your Durable Power of Attorney makes legal and financial decisions for you; the holder of your Health Care Proxy makes health care decisions for you and carries out your "end of life wishes" as you’ve expressed them in your Living Will.  Make sure all these documents comply with rules on protecting medical information (HIPPA) so that your agents can make informed decisions.

□ Review Your Beneficiary Designations.  As the years pass, it’s important to make sure the named beneficiaries of your various accounts are current.  These accounts include: you and your partner’s company savings plans; your life insurance policies, including group plans at work; your IRAs, among others.  Too often proceeds have gone to ex-spouses or to reimburse the state for a parent’s nursing home care because employees/retirees forgot to update their beneficiaries.

□ Calculate if You’re on Track to Afford to Retire.  Though hard to believe, 44% of Americans retire today without identifying if they can afford to.  Companies’ 401k or 403b providers, often have excellent, no cost calculators available at to help you with this task.  Employees can also access Fidelity Investments excellent calculator at www.fidelityinvestments.com and look for the "Retirement Income Calculator."  Though no calculator can foresee all circumstances, attempting to figure out if you’re on track can be an eye-opening experience to motivate you to get more serious about your retirement planning.

□ Contact Social Security to confirm Your Benefit Amount.  Nothing beats contacting Social Security directly at (www.ssa.gov. or at 1-800-772-1213) to confirm what your monthly benefit will be.  While everyone receives an Annual Statement, contacting Social Security directly will provide a much more accurate projection.  Likewise, you’ll discover which documents you’ll need to apply for benefits.    

- 8/2/2011