Outlook
for 2003
Studies of
people who make New Year's resolutions have found that success is more common
among those who think about their resolution for some time rather than deciding
on one at the last minute.1 Even if you don't
make New Year's resolutions, the year's end is a perfect time to look at the
accomplishments of the past and set goals for the future.
With the new year more
than one month away, you have plenty of time to help ensure that your financial
plans are on track for 2003 and beyond. Here are three steps you may want to
consider.
Rebalance
Your Portfolio
One basic aspect of a financial plan is deciding how your assets should be
allocated among investment options based on your time horizon and long-term
goals. Over time, these percentages can shift as your portfolio's value changes.
For example, if your stock holdings appreciate at a different rate than your
bonds or bond funds, you may discover that you need to buy or sell securities to
keep your plan balanced.
Take Advantage of Higher Contribution Limits
In 2003, contribution limits for employer-sponsored retirement plans, such as
401(k) and 403(b) plans, increase to $12,000 ($14,000 for workers aged 50 and
older). By raising your salary contribution to the annual limit, you may be able
to reduce your income taxes for 2003 and accumulate more for retirement.2
Review Your Insurance Policies
It may be time for a review if you'’ve had any life changes or it's been a
while since you evaluated your coverage levels. The amount of your life
insurance and disability income insurance policies may need to be adjusted if
you've had a child or a job change, bought or sold a home, or one of your
beneficiaries has had a change of health.3
Reviewing your financial situation can be more enjoyable than making a
resolution to start an exercise program or try to eat less. By planning your
actions for 2003 now, you may be more certain about your progress toward your
long-term goals.
1) ABC News, 1999
2) Distributions from employer-sponsored retirement plans are taxed as ordinary
income and, if taken prior to reaching age 59½, may be subject to an additional
percent federal tax penalty.
3) As with most financial decisions, there are expenses associated with the
purchase of life insurance. Policies commonly have mortality and expense
charges. In addition, if a policy is surrendered prematurely, there may be
surrender charges and income tax implications.
© 2002
Emerald Publications
