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Houston, We Had a Problem… But Now We’re Okay!

The Importance of Checklists and how they can help us with our finances

Houston, We Had a Problem… But Now We’re Okay!

Last week, a checklist used by astronaut James Lovell was sold at auction for $390,000.  You’ll remember that the Apollo 13 mission to the moon nearly ended in disaster when an oxygen tank exploded and caused the computer guidance system to lose power.  More than 200,000 miles above Earth, Apollo 13 commander Lovell used this checklist to make some critical calculations that allowed the crew to know their position in space and make a safe return to earth.  Lovell’s checklist led to what many describe as NASA’s finest hour.

So, what does this have to do with a personal finance column?  Well, unless you’re rolling in the dough, it’s probably not a good idea to spend that much money on an auction item that was expected to sell for only $25,000.  But more seriously, this column is about the importance of checklists.  Without Lovell’s checklist, the already ill-fated mission would have had a very different ending. 


What will the ending of your tax-year look like?

Year-end planning -- before the end of the tax year -- often gives you an opportunity to make a difference in both your tax situation and in your financial plans for the coming year.  December is an ideal time to examine your financial health and update your plans.  Here is a checklist that covers six different areas to review.  While the following checklist is useful, you won’t have to pay $390,000 for it.  In fact, if you contact the author, he’ll send you a copy for free.


Your Year-End Checklist

1.  Taxes

      Should I enter into any transactions that could improve tax situation?

      Have I sold any appreciated assets and do I have the cost basis information?

      Do I have any tax-loss harvesting opportunities for the current year?

      Has my tax advisor prepared a year-end tax projection, including AMT?


2.  Retirement Savings

      Should I convert my IRA to a Roth?  Explore full vs. partial vs. none.

      Have I maxed out my 401k and IRA contributions?

      I’m over age 50, should I be making “catch-up” contributions?

      What should I do with my old 401k and orphaned IRAs? 


3.  Retirement Income

      I’m nearing retirement, how do I turn my savings into income?

      I’m in my 60s, when should I consider taking social security?

      I’m in my 70s, when do I need to take “required minimum distributions”?

      How will I pay for possible extended home care or nursing home costs?

4.  Investments

      Have my investment goals or strategies changed?

      Do I understand my investment holdings and are they still appropriate?

      Should I review my asset allocation mix?

5.  Insurance and Estate Planning

      Do I have any term life insurance that is set to expire soon?

      Are all my beneficiary designations current and accurate?

      What should I know about estate planning and estate taxes?

      Will my family be secure if something happens to me?

      Should I fund college expenses for my children and grandchildren?


6.  General Finances

      How do I protect myself from market declines?

      Is my income and retirement plan protected if I get sick or hurt and cannot work?

      How do I keep my records safe and organized?



About this column: Steve Davis is a local CERTIFIED FINANCIAL PLANNER™ who has been helping clients for more than twenty years.  He serves clients in Mansfield, Foxboro, Easton and other local communities.   You can find out more about Steve and his company, Davis Financial at www.talkwithdavis.com 


Securities offered through LPL Financial Member FINRA/SIPC

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