Goodbye 2020 – How to Financially Prepare for 2021 and Beyond

Goodbye 2020 – How to Financially Prepare for 2021 and Beyond

December 31, 2020
Share |

When we celebrated New Year’s Eve a year ago, who could have guessed that 2020 would have gone the way it has? It’s worth taking a look back at the year to review the financial challenges that CRNAs have faced and consider these six strategies to put ourselves in a more secure position moving forward.

1. Emergency Reserve Fund
For the first time in our careers, we’ve seen CRNAs not working for stretches of time in 2020. No one could have predicted these layoffs or reductions in hours when the year began, so we’re stressing the importance of having an emergency reserve fund in place. Many Americans have had to dip into their savings and exhausted a lot of what they had built up. By stashing away somewhere between 3 to 6 months in expenses, you’ll have the peace of mind knowing you have some protection should we face another unexpected challenges.

2. Mortgage
The next aspect of your finances to put on your radar is your mortgage. Have you thought about refinancing? We saw a lot of CRNAs take advantage of the historically-low interest rates and save themselves significant money over the life of their loan. If you’re close to paying off your house it might not make as much sense, but it’s definitely something you’ll want to consider.

3. Credit
What about your credit? When is the last time you looked over your credit report? We’ve had first-hand experiences with credit mistakes over the past couple of years and that could really damage your financial reputation. On top of errors, there might also be a payment that you completely forgot about from years ago that needs to be resolved. Being aware of your credit can save you money and headaches down the road.

4. Portfolio
Now let’s shift to the investment side of your financial portfolio. Hopefully you didn’t let the significant losses in March keep you from the gains that were made over the past nine months. No matter how your investments performed, use this as an opportunity to review your allocations to see if you need to rebalance. Then consider the realized gains and losses you might have in your portfolio to determine what adjustments need to be made to keep you from having too many tax obligations.

5. Taxes
Speaking of taxes, this will be something to closely monitor this year and going forward as the general consensus is that tax rates will be increasing at some point. So how can you keep from having a big tax bill down the road? One thing we discuss with CRNAs quite a bit is utilizing a Roth account or possibly a Roth conversion. Since CRNAs may not be eligible to contribute to a traditional Roth IRA, check to see if your employer offers a Roth provision in your 403b or 401k plan or consider a backdoor Roth. Roth contributions mean you’ll pay more in taxes now, but it could be a significant savings down the road depending on where rates go.

6. Estate Planning
One of last significant items you need to get a grasp on is your estate plan. This is so easy to put off, and we see it happen all the time, but make it a priority to get this in order. Start with making sure your beneficiaries are updated on every account. This is an easy thing to do and it can save you and your family a lot of problems. Also make sure all of your accounts and passwords are saved somewhere that your spouse or significant other can access. Beyond that, get your will or trust set up and communicate with the necessary people, so your intentions are known.

Along with these six bigger items, there are some additional questions you will want to put on your list for 2021:

  • Are you maxing out your retirement contributions?
  • Where do you stand with any college funding that needs to be done?
  • Charitable giving and how it fits into tax planning.
  • How much will you spend in retirement?

We know life has been hard, but we hope that everyone can find one or two things that can get them more prepared for their future. 

To listen to this week’s podcast and learn more, click here.

With decades of experience working exclusively with CRNAs, CRNA Financial Planning® has the knowledge to help you save more of your hard earned money and determine appropriate tax minimization strategies. Schedule a free 15-minute introductory phone call to discuss your current situation and needs. You can also call our office at 855.304.3748 or email us at inquiry@crnafinancialplanning.com.