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In financial planning, there are many things that would be nice to do, such as rebalance your portfolios, check on your insurance deductibles, go through your receipts for spending, set up revocable trusts, yada, yada, yada.
There are only a few things that you absolutely have to do. Let's talk about those.
You have to have a health care directive. Through years of serving clients, one thing that consistently gets reinforced is that we are not invincible. A health care directive in Minnesota names an agent who can make medical decisions for you if you are unable to do so or if you simply wish for someone other than yourself to make decisions.
A directive can spell out your wishes regarding things such as life support, pain management and where you want care. Without a properly executed health care directive, your medical provider may scramble for family input and ultimately make decisions for you which they feel are in your best interest, but may not match what you wanted for yourself.
Once you have completed it, give it to others who will be involved in taking care of you so they can help with its implementation.
You have to have powers of attorney established. We have had clients with brain aneurysms and strokes that left them unable to handle their finances. But bills still have to get paid. A power of attorney insures that someone you trust can take over your general finances should you be unable to do so.
You have to have a will if you have minor children so that you get to decide who is responsible for them if you and your spouse die in a common accident. Many of our clients struggle with this decision. That struggle is OK.
You have to confirm your beneficiary designations for your retirement plans and life insurance. You want your designations to generally be individuals unless your estate plan makes trusts a better solution.
For many of our clients, we prefer that they use their retirement plans to fund their charitable requests upon death because if they wish to change their charity, it is easy to do so by simply changing the beneficiary.
Also, with the stretch IRA rules curtailed, retirement assets are less attractive for individuals to inherit (Roths being the exception). Directing your retirement assets to whom you wish to receive them is easily done through proper beneficiary designations.
You have to make it easy for your spouse to access your passwords should something happen to you. I use LastPass for all my stored passwords and my wife has the password for my LastPass.
You have to establish a small Roth IRA or convert a small amount of an existing IRA to a Roth (just as a placeholder) in order to make it easier to move money from a Roth 401(k) into a Roth IRA.
The SECURE Act means that many more people will be forced into Roth contributions in their 401(k)s.
While Roth contributions may not be optimal for those in the highest tax brackets, new rules for next year will push some individuals with higher wages into using a Roth for catch-up contributions.
When you leave your employer, if you don't have an existing Roth outside of work and wish to roll over your Roth 401(k) into a Roth IRA, you would start a five-year clock ticking on taking out tax-free money above your contributions.
On the other hand, you could roll over the money from your 401(k) into that old Roth and the five-year rule starts at the time that this account was originally set up. This is a cheap liquidity insurance policy.