Your Financial Calendar for Retirement

By Sue Steven, CFA, CFP, CPA

Perhaps one of your New Year's resolutions was to get your financial house in order. January has come and gone, but it's not too late to follow through on that promise to yourself. What follows is a month-by-month guide to staying on top of your personal finances throughout the year. If you get started now, you can catch up and be back on track by Valentine's Day.

First Quarter: Review Your Status and Set Goals

Reflect on how much progress you've made over the past year. Think about what you plan to accomplish in the year ahead.


To get a read on where you stand right now, update your Net Worth Statement. By adding up your assets and liabilities, you'll have a better idea of where you stand on building up retirement assets, real estate equity, and taxable assets. You can also see how you're progressing in paying off debt. If you update this statement every year, you can see your assets build as you move towards reaching your financial goals. Review your personal expenses. It's easy for your spending to get away from you if you don't pay attention. If you need help cutting costs, review "101 Ways to Cut Expenses."


Your W2s and 1099s should have arrived or will shortly. Start the process of rounding up your tax information. Update your retirement projection to see if you're on track. If you're short on time, check out the Ballpark Estimator. You can also find good online calculators at and Consider adjusting your withdrawal rate if you're already in retirement. To find your withdrawal rate, divide portfolio income (interest, dividends, principal withdrawals) by your portfolio's total amount.


Since you've already pulled your tax information together, you'll have time to do a little strategic planning for your portfolio.

  1. Make sure you have at least three to six months' expenses saved in highly liquid securities. (This is your emergency reserve money.) For some tips on the best vehicles for the job, check out Christine Benz's article.
  2. Make sure your investment-savings strategy is on autopilot. Participate in your company's retirement plan and have your contributions automatically deducted from your paycheck. Set up automatic deposit plans to send money regularly to your taxable investment accounts. Create your Investment Policy Statement. If you have already done an IPS in the past, compare your current portfolio to the parameters in your IPS. Do you need to make any changes? Rebalance your portfolio. For more specifics on how to do that, read "Getting Your Portfolio on the Right Track."

Second Quarter: Focus on Defensive Actions

Turn your attention this quarter to putting a strong defense in place. Cover your downside and you'll sleep easier knowing your family is protected.


Protect your family through life and disability insurance.

Life: Most people need life insurance when their kids are little and they have a mortgage. If this describes you, compare the dollar amount of life insurance coverage you have to the cost of putting those tykes through college and paying off your mortgage. Term insurance is the most cost-effective way to go for short-term needs. There are also many other situations and reasons to hold more permanent types of insurance such as whole life.

Disability: Bad backs, auto accidents, and a whole host of other things can happen that may prevent you from working. If you can get this coverage through work, it will be more cost-effective than buying it on your own. Usually policies cover about two thirds of your current income. File your tax return if you haven't already.


Assess your property-insurance needs.

Home: Most of you already have homeowner's or renter's insurance. This will protect you from fires, storms, and other disasters, but not necessarily floods or hurricanes. Read your policy closely to know what's covered. If necessary, add riders to your policy to cover you should the most devastating types of disasters happen.

Car: Everyone who drives needs auto insurance. Make sure yours covers at least $250,000 per individual and $500,000 per accident. Ask about discounts for alarms, air bags, or automatic seat belts.

Umbrella: Personal liability coverage is often referred to as an "umbrella" policy. It sits on top of homeowner's and auto. Most of you should have a minimum of $1 million of coverage in case you are sued for an accident on your property. The cost is minimal: just $100 to $200 a year buys you a lot of protection.


Review your health-insurance elections and adjust as necessary. Be sure to account for higher medical costs, as you do with your retirement planning. If you retire before age 65, when Medicare begins, you'll need to self-insure unless your company provides retiree health insurance coverage. Long-term care insurance is something everyone over 45 needs to consider. This type of insurance covers home health care and institutional nursing home care. Long-term care can be very expensive and can quickly eat through your nest egg. But not everyone will need this care. At a minimum, educate yourself about the issues by reading "The Ins and Outs of Long-Term Care Insurance." Make sure your beneficiary designations on your life insurance, retirement plans, and other contracts specify the beneficiary you want today. It's easy to forget to update these over time. Make sure these designations coordinate with your estate plan.

Third Quarter: Strategic Planning

You're halfway through the year. The best way to ensure financial success is to have a well-thought-out plan in place. Do some brainstorming about how to achieve your goals.


Have you been meaning to calculate the cost basis of your investments? Take some time to make sure you have a good record-keeping system to show purchases, reinvested dividends and capital gains, stock splits, etc. By getting this together now, it will be much easier when you sell your investments and have to fill out Schedule D of your 1040 income tax return. If you have stock options or restricted stock, spend some time analyzing when you plan to exercised and sell. This is a tax-heavy type of analysis, so have your tax return and current pay stub handy when you crunch the numbers. You'll find good calculators and other educational materials at If calculating cost basis and determining when to exercise stock options is giving you a headache, consider hiring a financial advisor with a background in tax planning. Read "How to Hire a Financial Advisor."


Get estate documents in place. You need to think about who would care for your children, how you would want your assets distributed, who would administer your estate, and so forth. Many people think of their pets as their family. Don't forget to plan for their care when you update your estate documents. Find an attorney who specializes in estate planning to prepare your documents. You can go to and look under Trusts and Estates/Estate Planning for specialists in your area.


Have you thought about how you're going to fund college costs? To review the various types of college funding vehicles, read "Your Guide to College Savings Plans." Calculate the cost of college for your kids at If you've decided to opt for a 529 plan, read Kerry O'Boyle's recent article about how to navigate this often-hazardous terrain. Once your kids are successfully launched, continue to give them guidance on their first job, first car, and first house. Read "Helping Your Kids Through Financial Firsts."

Fourth Quarter: Follow Through

Don't wait until the last minute. Make sure your plans are being executed before the year is over.


Fund your living trusts. If your estate plan includes living trusts, you'll need to retitle your brokerage accounts (or whatever assets you plan to use) in your name as trustee of your living trust. Review your retirement plan contributions for the year to date. You can typically find this information on your pay stub. Implement your stock option strategy. Do a year-end tax projection to see how many incentive stock options you can exercise without triggering AMT (Alternative Minimum Tax).


Consider year-end tax-loss harvesting in your portfolio. Figure out your realized (what you've already sold) gains/losses for the year to date. Then as you rebalance your portfolio, see if you can sell losers to offset gains, or take gains to net out losses, if that makes sense in the overall strategic direction of your portfolio. Review your company benefits and make any necessary changes. Be sure to take advantage of company matches to your retirement plans. Take time to give thanks for all your many blessings--financial and otherwise.


Do the holidays put you in a generous mood? Remember: You can give financial gifts up to a certain amount without incurring gift tax. Give to those in need and receive a tax deduction. Make sure your gifts go to a qualified charity. Organize your records and throw out what you don't need. Start the new year on the right foot.