Budgeting. This time of year, investors will be receiving credit card statements from the holiday season. Add up last year’s spending to see whether you came in over- or under-budget, and think about where you might be able to cut back. To help make sure you’re staying in budget this year, max out your 401(k) contributions and consider setting a portion of your paychecks to go directly into your investment account.
Income tax. Put some (or all) of your refund towards an emergency fund or another financial goal. The IRS can distribute your refund to up to three different accounts, making it easier to set aside a portion of the refund while bypassing the temptation to impulse buy. On the other hand, if you end up owing money to the IRS, consider using a securities-backed loan to pay the bill rather than liquidating assets that may trigger a short-term capital gains tax.
Social Security. Save yourself from reduced Social Security benefits as a result of inaccurate earnings records. Review your Social Security statement annually to check for discrepancies. In order to correct an earnings record from over three years ago, you’ll be required to provide extensive documentation before the adjustment is considered. If you can’t come up with the proper proof, your benefit will be calculated based on the inaccurate records and you’ll miss out on benefits you worked for. Log on to www.ssa.gov to access your Social Security records.
Check back after March 20 for CIO's spring checklist, including ideas on estate planning, insurance and what you can do with stock options and restricted stock.