Well, we just past the halfway point of 2020.  Five months to go.  Time for a mid-year financial checkup.  I’m a big proponent of doing an annual review each January, but this year has been a bit…unusual…so I encourage you to look things over now and make sure that your retirement plans are still on track.  Here are a few things to focus on as well as a free Financial Checkup Checklist to help.

Investments.  If you’ve been afraid to open your statements or log in to your accounts, it’s time.  Look at where you are, but more importantly, look at where you’ve been.  Markets plunged and then rallied, so you’ll see volatility for sure.  But if it’s more than you can stomach (or more than your plan can handle), it’s time to rethink your risk and allocation.  

Work.  If you lost your job or changed jobs due to the pandemic, you need to re-run your retirement plan and make sure that it still works.  A new job means a different income, different benefits and a different 401k.  Those are all variables in your plan.  If they change, your timeline for retirement might change. 

Savings.  It’s natural to get defensive in the face of uncertainty.  When markets are plunging and the economy looks shaky, it’s easy to quit saving and investing.  I see it all the time.  It’s one thing if you lost your job or your income shrank considerably.  But if you’re still working and you just quit saving out of fear, turn those automatic investments back on.

Budget.  Did your spending change during the lockdown?  Mine sure did.  When you have no idea how bad a downturn will get or how long it will last, it’s natural to reevaluate your spending and reconsider your wants vs. needs.  Ultimately, that’s a good thing.  Nothing impacts your ability to retire quite as much as your retirement budget.  The leaner you can make it, while still doing the things that are important to you, the better off you’ll be.  Cut the fat and optimize your spending for the lifestyle you want.  Here’s a budget worksheet to help.

Debt.  Divide your total debt by your income.  That ratio should get smaller over time.  According to research by Charles Farrell, your Debt/Income ratio should be around 1.0 by age 45 and zero by age 65.  How are you doing?  What would your finances look like if you were debt free?  How would you feel?  What would you do with the extra money?  How soon could you retire?  Make a list of your debts and put together a plan to pay them off.  And if you have a mortgage, consider refinancing while rates are at historic lows.  

Insurance.  Review all your coverages, but pay particular attention to your life insurance.  The pandemic is a good reminder that unexpected things happen.  If your family is depending on your income, then you need to have a plan to replace that income if you die.  A general rule of thumb is to have 7 to 10 times your annual income in life insurance, but you should meet with a trusted adviser to discuss the specifics of your situation.

Legal affairs.  Again, the pandemic is a good reminder that unexpected things happen.  Make sure that your will, powers of attorney and estate plan are accurate, up-to-date and reflect your current wishes.  

One more thing before I go.  Don’t just focus on your finances or legal affairs.  One of the most important ingredients to a successful retirement is to decide what you really want out of life and to start taking those things very seriously.  COVID-19, while terrible, has likely helped you in that regard by forcing you to reexamine your habits, routines, priorities, purpose, relationships, finances, lifestyle, career and any number of other things.  What have you learned about yourself?  Don’t just ignore those lessons and slowly ease back into your pre-pandemic rut.  Design a lifestyle—home, work, leisure—that reflects your priorities and is faithful to what you want out of life.  You still have plenty of time to do that before the end of the year.  Redeem 2020 by turning the disasters and difficulties into a better, more secure, more fulfilling life.

Be Intentional,


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