How to Financially Plan for 2017
By Anthony Saffer
If you are sitting down to plan your finances for 2017, you might have imagined this moment differently. With the election of Donald Trump as our nation’s next President coupled with a Republican congress, the political landscape has significantly changed. Let me remind you, as I said pre-election, you have more influence on your own financial future than the next President, however proposals by the President and Congress can provide some insight to your planning efforts.
When considering what may lie ahead, rely less on predictions and more on what’s traditionally worked. Stick to foundational principles. Allow the changes of today to simply enhance your plan heading into 2017:
Taxes
Both the President and House Republicans have proposed separate plans to reform taxes. These plans would reduce taxes overall. How it affects you will depend on your income and filing status. High income earners would most likely see tax reductions. It’s less clear for middle and upper-middle income earners. Single filers and large families are more likely to see tax increases per some analyses.
Taxes/Solutions
When you file taxes for 2016, make sure to ask your CPA how to best prepare for 2017 given proposed changes. Should you adjust withholding or increase retirement contributions? If you’ll be saving taxes, have a plan to make productive use of that money. Tax reform will be an issue to follow until implemented.
Savings and Debt
Interest rates jumped immediately after the election. Interest rates are always an “unknown,” but let’s just say the general trend is up. That’s good news for savings accounts and bad news for variable rate debt like credit cards and home equity lines.
Savings and Debt/Solutions
Matt Sauer of Different Mortgage suggests, “If you’ve been riding a variable rate mortgage, now might be the time to lock in a fixed rate.” Additionally, build savings with acceptable interest to avoid future debt. While preservation and often convenience may take precedence for cash savings, don’t assume your bank is giving you the best rate on your money. Sites such as bankrate.com or nerdwallet.com can help compare rates.
Investment Markets
After the stock market plunge the very night of the election, U.S. stocks increased starting the next morning. Bond values, however, decreased counteracting stock returns for more conservative investment plans. International stocks have continued to trail.
Investment Markets/Solutions
If you are waiting for a time of “certainty,” you will be hard-pressed to find it. Trying to guess the direction of these markets (or waiting for the news to tell you what to do) produces more losers than winners. Instead, an investment plan should be diversified and fit your tolerance for risk and align with your objectives. Consult your financial planner to develop a plan that fits you. At very least, consider a target-date retirement fund that is designed to align with target retirement years.
The changes of today should not supersede your foundational plan, but understanding the times can enhance it…
And that is just one more Principle of Prosperity!
Anthony Saffer, CFP of One Degree Advisors, Inc. coordinates principled financial solutions for families. Learn more at: onedegreeadvisors.com
Advisory services offered through One Degree Advisors, Inc. Securities offered through Securities America, Inc., Member FINRA/SIPC. One Degree Advisors and Securities America are separate companies.
