Year End Clearance: What to do before this year is done.
With the holiday season in full swing, the thought of sitting down to organize your home and financial life can feel overwhelming. But while it’s tempting to push it off until January along with all of your other resolutions, making even a few small moves to streamline your situation before 2019 draws to a close can go a long way toward setting yourself up for a successful new year.
Here are just a few areas to consider:
Secure Your Benefits
Most people faithfully pay their FICA taxes, but rarely follow up to make sure that the government has an accurate accounting of their income and benefit contributions. The social security income you receive is based on how much you earned during your working career, so it’s critical to make sure that your highest-earning years are correctly accounted for. Periodically check your records by setting up a “my Social Security account” at socialsecurity.gov/myaccount to access your Social Security Statement and verify that it matches your current and past earnings. All you need is a valid email address to create this no-cost account.
Track Utility Trends
With most bills, the conventional wisdom is to make sure they’re correct, then toss them after they’ve been paid. However, keeping your gas, electric and other utility statements on file is a wise idea. If you ever put your home on the market, being able to show potential buyers utility cost trends can be a selling point. And if you deduct any of these costs on your tax return, you’ll want to have the paperwork handy for backup.
Have there been any major changes to your life and family this year? Whether it’s the birth or adoption of a new child, a passing of a relative or a marriage or divorce, you’ll want to make sure that your beneficiary information is updated on all of your accounts, policies and investments.
Save or crap?
Even though most of us manage our finances online, there are still a few things you’ll want to think about keeping as paper documents:
• Credit card and/or bank statements – If you make a big purchase and your lender offers some product protections, hold onto that month’s bill.
• Tax returns – The IRS can randomly audit you three years after you file, and up to six years if they believe you underreported your income by at least 25%. So, you’ll want to keep your returns for at least 7 years.
• Insurance policies – Hold onto your policies for home/renters, car and umbrella insurance for the year. Toss the old ones when you get a renewal.
• Loan paperwork – As long as you’re paying the loan (car, mortgage, etc.) keep all your docs and contracts.
• Personal documents – Invest in a firebox or safety deposit box for hard-to-replace paperwork such as birth certificates, military records, marriage and divorce papers, social security cards and passports.
Set aside a little time to review these subjects, and you’ll be ready to enter 2020 with a clearer mind and a cleaner financial slate.