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2020 Year-End Financial Checklist

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Let’s be honest: this is a long list of things to review. But stick with us. We promise it’s worth it!

We have given you two paths with this checklist; the shortened review process is first, followed by the detailed process. There is no need to tackle all of this at once, or even in its entirety. If one or two things stand out for you, do those! You will be in a better position than you were before even if the actions are small. Most importantly, you don’t have to do this alone. We are here to help you. Together, we will make sure you are ready to ring in the new year with confidence and a plan!

If you do nothing else, do this…

At a minimum, we recommend updating your net worth statement at least once per year. A net worth statement is a snapshot of your financial life. It includes the things you own (assets) and the debts you owe (liabilities). A net worth statement is the perfect tool for quickly measuring your progress from year to year as you work toward your financial goals. Need a template? Check out the Wisdom Wealth Strategies net worth statement on our website. (CLICK HERE)

Remind yourself of what you are working to achieve. What are the goals that are important to you? Is it college, early retirement, financial independence, or something else? Remember and recommit each year or revise your goals so they align with your intentions.

It all comes down to cash flow. Cash flow is a technical term for how your household receives and spends money. It is the flow of money into and out of your hands. It is critical information, because most of your other financial decisions will be impacted by how you manage your cash flow.

Questions to review:

  • What is my household’s gross income (how much you make before taxes and deductions?)
  • What is my household’s net income (how much do I take home after taxes and deductions?)
  • What is left over at the end of every month? If there is extra, you are cash flow positive. If you are transferring money from savings each month, you may be cash flow negative.
  • Where does the money go? If you have a hard time answering this question, you may wish to utilize a tracker. Through Wisdom Wealth Strategies’ financial planning software, we offer clients an expense tracker at no cost. It allows you to link bank accounts and credit cards, categorize your expenses, and compare them to your spending goals. Let us know if you would like to use the tool and we will help you get it set up.
  • You can determine where your money goes without using a tracking tool, if you prefer the “paper and pen” method. Wisdom Wealth Strategies offers a very comprehensive spending plan template on our website. CLICK HERE
  • Review your credit card debt. We encourage clients to never carry credit card debt. If you are, is it growing or shrinking? A growing balance is an indication that you are cash flow negative, and the issue should be addressed immediately.
  • Check your emergency savings balance. We encourage clients to have enough money to meet six months of fixed expenses.
  • If your emergency fund is in a brick-and-mortar bank account earning almost no interest, consider switching to a high yield savings account.
  • After evaluating your cash flow, if you find you have extra funds, it’s important to ensure that the opportunity to put them to good use is not lost. Consider increasing retirement contributions or college contributions, funding an IRA, or creating an investment account geared toward a specific goal.


If you have worked through the process above and you’re ready to dive deeper, let’s get into the details. What follows is a list of common action items that will help you review your year and set you up for success in 2021.


Are you on track for retirement?

  • We recommend saving a minimum of 10% of your gross income for retirement. Saving 15% is even better. If you are not there yet, increase your contribution by 1-2% periodically until you reach your goal.
  • Are you now 5 years or less from your planned retirement date? You’re in the red zone! In the 5 years prior to retirement, it’s important to ensure you have everything in order. If you haven’t already, you should consider an in-depth retirement analysis with a Certified Financial Planner Professional™.
  • Evaluate your ability to save with a Roth IRA or a traditional IRA.
  • Evaluate your ability to complete Roth conversions to improve your tax outcomes in retirement.
  • Evaluate the need to rollover old employer plans. It is usually a good idea to simplify and consolidate when possible.


Already in retirement? There is still work to do!

  • Revisit your retirement income. Are you receiving enough income to satisfy your quality of life goals?
  • Do you anticipate tax changes that would change your income situation?
  • Do you have a plan for claiming Social Security?
  • Have you evaluated your Medicare options during open enrollment?
  • Should you consider Roth conversions if you anticipate required minimum distributions (RMDs) that are larger than you will need?
  • 2021 will bring the return of RMDs. You’ll need to remove the required amount by 12/31/2021.


Review your investments at least once per year.

  • Review your last quarterly statements for each of your investment accounts.
  • Ensure that your taxable accounts are invested focusing on tax efficiency, with an eye to asset location and the potential for capital gains distributions from mutual funds.
  • Consider tax gain/loss harvesting if it has not already been performed.
  • Review your investment allocation. Does the risk you are taking in your portfolio match your tolerance for risk?
  • Review your beneficiary designations. Remember that whoever is listed as your beneficiary is the person who will receive the account, regardless of what your will states.
  • Socially Responsible Investing (SRI) strategies, also known as Environment, Social, and Corporate Governance (ESG), are more widely available than ever before. If that is becoming more important to you, consider investment strategies that align with your values.
  • Familiarize yourself with the technology tools available to you. Wisdom Wealth Strategies has a client portal that helps you see what’s happening with your accounts, day in and day out!


Start thinking about tax time now.

  • Evaluate opportunities to defer or reduce income if you anticipate being in a lower taxable income bracket in 2021. Where possible, accelerate deductions into this tax year.
  • If you had a lower income year this year, consider opportunities to recognize income this year instead of next year.
  • Bunch medical deductions into the same year to increase the potential to claim deductions.
  • Bunch charitable donations into one year to put yourself over the threshold to itemize instead of claiming the standard deduction.
  • Do a trial run of your 2020 tax return in November or December.
  • Increase your 401k contributions through the end of the year.
  • Consider exercising stock options if your income is lower this year than you anticipate it being in the future.
  • Ensure your tax withholdings are appropriate. It isn’t in your best interest to under-withhold or over-withhold. You can find a calculator on the IRS website (CLICK HERE), or your tax professional can help you understand and adjust your withholding elections.


Support your loved ones and valued community partners through gifting.

  • The annual gift tax exclusion is $15,000 per person in 2020. That means that any individual can give any number of other individuals $15,000 each without a reporting requirement.
  • Make charitable donations before it gets too close to the end of the year. Gifts must be made by 12/31. Consider bunching this year’s and next year’s gifts into a single year to potentially help with your tax burden.
  • Consider gifts of appreciated stock instead of cash or checks. The charity gets the full amount of the gift, you get the full deduction, and no one pays the tax on the gains!
  • Consider giving bigger gifts to fewer charities. This reduces the overhead cost of accounting for each gift.
  • Track your charitable donations and keep receipts.
  • Gift your Required Minimum Distribution (RMD) to charity. It’s an excellent benefit to the charity and to you.
  • Consider a donor-advised-fund. You receive an immediate income tax deduction, and the charity receives support they can count on.


Review your protection planning (insurance).

  • Take the time to properly evaluate your life, disability, and health insurance options during open enrollment for your employer’s benefits program.
  • Check your beneficiaries on your life insurance.
  • Make sure you know when any term policies expire so you are not caught in a gap with no coverage.
  • Life changes, like marriage, divorce, retirement, or the birth of a child are reasons to evaluate your life insurance needs.
  • Evaluate your need for a disability income policy.
  • Evaluate your need for long-term care insurance.
  • If you haven’t recently, evaluate your property coverages, including home, auto, umbrella, and valuables. Things change over time, so don’t assume you are covered if you haven’t reviewed it.


Review your plan to fund higher education for children or grandchildren.

  • If you have a child attending college in the fall of 2021, you likely need to file the FAFSA. The early bird gets the worm, so don’t delay!
  • Make college planning contributions prior to the end of the year. In Colorado, 529 plan contributions receive a state income tax deduction.
  • Are you on track to reach your goals for college savings? Can you increase your contribution for the coming year?
  • Contribute monthly through an automatic-contribution-plan. Set it and forget it!
  • If you own a UTMA, make sure you understand the implications at the age of majority, which is 21 in Colorado.
  • Keep good records and document the distributions for college expenses from 529 plans. Keep receipts.
  • If you are a grandparent interested in planning for the education of grandchildren, there are unique options to consider. The decision should include the input of tax professionals and your Certified Financial Planner Practitioner™.


Ensure your estate plan still reflects your intentions.

  • If you have a comprehensive plan and you haven’t reviewed it lately, get it out and review it. Make sure it still meets your needs.
  • Do you have powers of attorney for healthcare decisions and financial decisions in place?
  • Do you have a will?
  • Do you have a healthcare directive informing your loved ones and physicians of your wishes for care?
  • Double-check beneficiary designations on all accounts.


Additional evergreen items include:

  • Inform your advisor of life events, like births, deaths, job changes, changes to marital status, relocations, etc. The more we know, the better we are able to help you.
  • Name a trusted contact. If anything happens to you, who can we speak with on your behalf? Wisdom Wealth Strategies has a form that we ask you to fill out that grants us permission to work with a trusted person on your behalf.
  • Fund your health savings account (HSA) every year before the tax filing deadline.
  • Spend your flex savings account money before the deadline, which may be 12/31 or later. Check your plan documents to be sure.
  • Check your credit report on AnnualCreditReport.com.




wisdom wealth strategies


Andrea L. Blackwelder, CFP®, ChFC, CDFA® and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with the Denver Financial Advisors at Wisdom Wealth Strategies.

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