How To Prep Your Finances For 2021 Pt.4

In continuation of the last series recap, below are the final steps 16-20:

Lesson 16 of the Senior Exec Money Series: Be Smart About Charitable Giving

Everyone loves a two for one sale.

If you regularly contribute to a qualified charity AND need to make mandatory distributions from a retirement account, consider lumping the two.

Charitable distributions made directly from an IRA have the added benefit of:

  1. Fulfilling your RMD for the year.
  2. Not counting as a taxable distribution if done correctly.

As your tax deferred accounts build up in value, your required distributions can get quite hefty – ditto for your tax bracket.

If you’re charitably inclined and of age, work with your tax pro to take advantage and plan accordingly.


Lesson 17 of the Senior Exec Money Series: Plan Your Tax Strategy

Change is constant – in life and in your finances. With a projected change in public tax policy – it’s a great time to be proactive and navigate those changes.

For top earners, proposed changes to the top tax rate could see an increase from 37% to 39.6%.

Cap gains may also nearly double for those earning $1mm or more – from 20% to 39.6%.

Generally speaking, no one likes to pay more so it’s a great time to take action while we know what the current rules are.

Running tax projections across several years/decades can help you save not just for today, but for years to come.

In this article from Forbes discusses the proposed changes in great detail. Work with your tax professional and advisor to create your plan:

Lesson 18 of the Senior Exec Money Series: Set Rules For You Portfolio

We’ve all seen the roller coaster our investments can take. We feel the urge to protect what we’ve built and want to “get out” while we can. We figure we’ll “get back in” once things look to be in the clear.

The reality is that we are poor judges of the investment landscape. Even the “pro’s.”

Portfolio changes should be made as a result of changes in our personal circumstance and goals – not headline news.

This short video by Dimensional Fund Advisors illustrates how values are impacted if we miss out on a handful of days.

“Time in the market, not market timing.”

Lesson 19 of the Senior Exec Money Series: Leave the Legacy You Want

You don’t just work hard for your own success – you also likely do it for the success of your family.

As you accumulate your wealth and create the retirement you envision – it’s also important to think of how you’ll distribute your wealth.

As discussed in this article by AARP , it’s important to specify (in detail) how your wishes should be carried out. Some highlights:

  1. Communicate with your heirs and explain your wishes – if necessary
  2. Do the gifting yourself – especially if your estate is above certain limits
  3. If you’re unsure how “good with money” your heirs will be – create a trust to set some ground rules.

Lesson 20 of the Senior Exec Money Series: Put a Plan in Place

As the Senior Exec Money Series wraps up – it’s all about taking action.

You don’t have to do it all at once – but small, piecemeal steps can start your new year on the right foot.

Consult with your advisor, attorney, and tax professional to tie up loose ends.

And if you’re dreading having to set it all up and need some guidance, hit the link below.

Happy New Year!