Stay Ahead of the Game: Review Your Financial Plan for 2024

Stay Ahead of the Game: Review Your Financial Plan for 2024

January 08, 2024

Whether you’re a New Year’s resolutions enthusiast or not, improving your financial well-being is a goal that most people strive for all throughout the year. At Siminou Wealth Management, we believe that the more attention you give to your financial strategy, the brighter your future will be. 

To help you fortify your financial fitness, we’ve created the following guide to assist you in reviewing every facet of your financial plan to make sure that you’re setting the stage for a year of the highest success. 

Retirement 

Maximize Your Retirement Savings

Employer retirement plans (401(k)s, 403(b)s, 457s) allow contributions up to $23,000 in 2024 ($30,500 for those age 50 and over). These contributions are payroll-deducted, reducing taxable income. Maximize contributions to defer taxes, potentially benefiting from a lower tax bracket in retirement. Note that the SECURE 2.0 Act raises catch-up contributions for 2025, allowing those aged 60-63 to contribute up to $10,000 or 150% of the regular catch-up contribution.

Strategic Sustainable Dividend Income

Crafting the optimal retirement fund involves aligning it with a strategy that can sustain annual expenses through dividends. My preferred approach centers around the Dividend Growth Aristocrat Strategy, which prioritizes investments with a proven track record of consistent dividend growth. Additionally, I’ve strategically introduced U.S. Treasuries into the mix, capitalizing on the current high-rate environment. This well-rounded portfolio is designed to provide a reliable income stream so you can create a solid, stable foundation for retirement.

Cash Flow 

Assess Your Emergency Fund

Build or secure your emergency fund now to cover 3-12 months of living expenses, including mortgage, utilities, groceries, and transportation. Experts recommend a larger fund amid economic uncertainty. Single or one-income households should aim for the higher end. 

Furthermore, integrating dividend-focused strategies into your investment portfolio can play a pivotal role in creating positive cash flow. By prioritizing assets that generate regular dividends, you not only enhance your financial resilience but also create a consistent income stream you can rely on.

Ensure the fund is in a liquid account with competitive interest rates. In 2024, the SECURE 2.0 Act allows annual contributions of up to $2,500 to a 401(k) “emergency fund” without early withdrawal fees.

Risk Management

Cut Your Losses and Remove Politics

When an investment doesn’t work as expected, the wise approach is to cut losses promptly and pivot. As legendary investor Peter Lynch wisely observed, “Far more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves.” This insight shows the importance of avoiding emotional decision-making and opting for a disciplined risk management approach.

Also, it’s crucial to separate political beliefs from investment decisions. While political events can impact the markets, letting personal convictions drive investment choices can lead to biased decisions. A sound investment strategy considers a diverse range of factors, including economic indicators, industry trends, and company fundamentals.

Contribute to a Health Savings Account (HSA)

Enrolled in a high-deductible health plan? Consider contributing to an HSA in 2024 for triple tax savings: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses. 2023 IRS limits are $3,850 for individuals and $7,750 for families ($4,150 and $8,300 for 2024). Those 55 or older can make $1,000 catch-up contributions until April 15, 2024.

Taxes

Tax Mitigation

For savvy investors looking to optimize their tax situation, Oil & Gas funds present a compelling avenue for tax mitigation. These funds offer unique opportunities to strategically manage your tax liability while potentially benefiting from the energy sector’s financial growth.

Another effective tax mitigation strategy involves tax lot equity sales. By intentionally selling investments with specific tax lots, investors can control the timing and tax consequences of their capital gains. This approach allows for a more tailored and efficient tax management process.

Understanding the tax implications of your investment decisions is a crucial aspect of financial planning. Leveraging tax-efficient investment options, such as Oil & Gas funds, and employing strategic sales techniques like tax lot equity sales, can contribute to a more tax-advantaged investment portfolio.

Consider Tax-Loss Harvesting

Tax-loss harvesting involves selling investments at a loss to offset gains in your portfolio, reducing your tax liability. The sold investments are typically replaced with similar securities to maintain your asset allocation. In the volatile market of 2023, it was a valuable strategy. Although the deadline for the 2023 tax year has passed, consider discussing with your advisor the potential to revisit this strategy in 2024 to optimize your tax situation.

Investments

Assess the Market’s Ebbs and Flows

When it comes to investing, the pursuit of growth is a fundamental principle that shapes successful portfolios. However, the path to financial success requires a nuanced approach that considers both short- and long-term strategies. Timing is a critical factor in creating any investment strategy. There are seasons for short-term swing trading (focusing on capitalizing on market fluctuations) and times for long-term investments (building wealth steadily over time). Recognizing the right moments for each strategy is key to optimizing returns and managing risk effectively.

Remember that volatility is the price of admission that comes with wealth creation. As you consider your personal risk tolerance, I like to emphasize the significance of psychological resilience in investing. Controlling emotions and maintaining focus on objective indicators, such as price charts, helps keep you focused when market shifts occur. 

Estate Planning

Consider Life Insurance Products

At the heart of effective estate planning lies the use of life insurance products, a powerful tool to address aspects of wealth transfer and protection. As the saying goes, “Rich people plan for three generations; poor people plan for Saturday night.” This Gloria Steinem quote speaks of the principle of estate planning—a forward-thinking strategy that lays the foundation for the long-lasting well-being of your family.

Life insurance products play a pivotal role in this process and offer a multifaceted strategy to meet the unique needs of your estate. Additionally, they can be tailored to meet specific legacy goals, whether creating financial stability for loved ones, endowing charitable causes, or facilitating the smooth transition of family businesses.

Review Your Estate Documents

Similarly, it’s important to review your estate planning documents, including your last will and testament, any powers of attorney, living wills, and/or trust documents. The new year is always a good time to take another look at these documents or start drafting them if you don’t already have them in place. 

A Partner to Provide Support

Feeling overwhelmed by the task of reviewing your financial plan for the new year? The Siminou Wealth Management team is here to help. With a wealth of tools and resources at our disposal, we specialize in assisting clients in getting their financial strategy in order, so they can make the most of life. 

Ready to take the first step? To schedule a no-obligation meeting, email rsiminou@siminouwm.com or call (516) 647-7146. 

About Rich

Rich Siminou is principal and founder of Siminou Wealth Management, a financial services firm (based in Kings Point, NY) specializing in comprehensive financial planning, real estate planning, and tax mitigation strategies. As a fee-only financial advisor, he serves pre-retirees and retirees throughout New York and across the United States. Rich’s decades of investment experience (and the resulting foresight) makes a real difference in his clients’ portfolios as well as in their lives. Understanding his clients as people, not numbers, he thrives off building relationships as he helps them grow and preserve their wealth, always putting them first. When life changes occur—and they always do—he’s there for them, moving forward together toward success. 

Rich holds a bachelor’s degree from New York University and an MBA in Finance from Baruch College’s Zicklin School of Business. Outside of work, he enjoys exercise, sports, participating in charities, and spending time with his family. To learn more about Rich, connect with him on LinkedIn.