5 Smart Comprehensive Financial Planning Moves for 2023

High Earners: 5 Smart Comprehensive Financial Planning Moves for 2023

High Earners: 5 Smart Comprehensive Financial Planning Moves for 2023
Let’s look at several smart comprehensive financial planning moves high earners should make early in 2023—after all, the start of a new year is an ideal time to reflect upon your financial wellness.

Acting early helps free up additional money for investing, ultimately increasing your wealth and providing you more lifestyle options, like considering early retirement.

Tip: For straightforward financial advice, subscribe to The Adviser You Can Talk To podcast. Also, click here to explore and sign up for more of our expertise on a variety of topics in various formats.

5 Comprehensive Financial Planning Moves to Make in 2023

1. Save (50% of) Pay Raises and Bonuses

Bonuses and pay raises vanish if you don’t plan ahead; therefore, anytime you receive a windfall, save at least 50% from each event, including a recurring 50% for all raises.

A windfall is money you hadn’t planned on and money you’ve been living without. Without comprehensive financial planning, you’ll lose most of your windfall. One example, 70 percent of lotto winners lose or spend all that money in five years or less.

Even if you plan to max out your 401(k) this year, you still can save your windfall using other financial vehicles, like private equity investments, Roth IRAs or real estate investments.

For high-net-worth individuals, alternative investments may also be appropriate for a windfall; however, the investments should match your long-term goals and investment decisions should be made alongside an experienced wealth adviser.

If you’re currently a high earner considering hiring a wealth adviser, then here are 15 critical questions you need to ask your financial adviser before partnering.

Simple savings example, yet powerful outcome:

Let’s say you received a $40,000 bonus and you save half.

Using Investor.gov’s compound interest calculator, you invest $20,000 today at a 7% annual compounded interest rate. In 10 years, you’ll have earned an estimated $39,343—almost doubling your bonus. (Note: These are theoretical returns and such a rate is not guaranteed.)

2. Maximize Health Care Benefits

Throughout the years, we’ve seen a great deal of underutilized health care benefits, including Employee Assistance Program (EAP) resources.

Many employers offer free and confidential EAP programs designed to help you through life challenges. Benefits often include consultations for mental and physical wellness, substance abuse, bereavement, credit and money management, and more.

Another underutilized health care benefit: Health Savings Accounts (HSAs). Only available to those with high-deductible health insurance plans, your contributions roll over each year (there’s no use it or lose it), and growth and withdrawals are tax free when you use the money for qualified medical expenses.

What are 2023 HSA contribution limits?

HSA annual contribution limits for 2023 include $3,850 for self-only or $7,750 for family coverage. Individuals 55 or older may also contribute an additional $1,000 annually, aka a catch-up contribution. These limits include any employer contributions.

More employers are also starting to match their employees’ HSA contributions. If your employer isn’t one of them, perhaps it’s time to initiate that conversation.

Important Reminders:

Remember, out-of-pocket deductibles reset to zero come Jan. 1, and for mental health benefits, new EAP referrals are typically required.

3. Optimize Employer-Sponsored Financial Benefits

The following is a benefits checklist to review annually:

  • Executive Compensation Benefits
  • Non-Qualified Deferred Compensation Plans (NSOs) and Incentive Stock Options (ISOs)
  • Profit Sharing
  • Retirement Plans (e.g., 401(k)s, 403(b)s, etc.)

Tip: Equity compensation is becoming a bigger part of many employees’ paychecks. Understand the ins and outs of this wealth-building tool. Listen to our podcast, Making the Most of Equity Compensation.

4. Review Estate Plans

It’s likely you experienced a life milestone in the past several months, e.g., aging parent needing assistance, birth, college, death, home sale/purchase, retirement and more.

Use our two complimentary checklists to ensure your estate plans are effective:

Will Planning Checklist

Estate Planning Checklist: Must-Haves Before You Die

Tip: Check out our complimentary special reports, Settling an Estate Checklist: 17 Critical Steps at a Difficult Time and 10 Essential Questions to Ask an Estate Planning Attorney.

5. Consider These Other Comprehensive Financial Planning Factors

* Is there a need to increase your life insurance or disability benefits? Some employers allow you to increase your benefits a certain percentage each year without a physical.

*  Are you entering your 50s? If so, understand how you can get an extra boost in your retirement savings. Read our post, Planning in Your 50s: Catch-Up Contributions.

*  Are you turning age 65 this year? If so, you’ll want to sign up for Medicare. You’re first eligible three months before turning 65. If you fail to sign up during your Initial Enrollment Period, you may incur a late enrollment penalty.

* Are you on Medicare? If so, mark your calendar for Medicare and Medicare Advantage open enrollment dates, Oct. 15–Dec. 7 and Jan. 1–Mar. 31, respectively. During these times, you may make changes to your health care coverage including joining, switching and dropping plans.

Tip: Making smart Medicare decisions helps prolong retirement income. Avoid costly and irreversible mistakes, read our complimentary special report, Medicare Made Simple.

* Is this year ideal for converting your traditional IRA to a Roth IRA? After all, it’s one of the smartest tax moves you can make. Learn more, download our complimentary special report, Why Convert From a Traditional IRA to a Roth IRA?

* Is your retirement income plan on target? How do you know? Visit our retirement income planning information portal for answers or meet with one of our wealth advisers.

* Will you be retiring soon? If so, follow our getting ready to retire: 5 steps.

*  Are you anticipating filing for Social Security soon? Many investors overlook how filing timing impacts their taxes. Get answers by reading our post, When Should You File for Social Security?

* Have you entered a new tax bracket? The IRS released updated tax brackets, contribution limits and standard deduction numbers for tax year 2023. While these updates occur annually, this year’s adjustments pack a greater punch courtesy of higher inflation. Read the full post, Updated Tax Brackets for 2023: Lucky 7.

Tip: While it’s important to do comprehensive financial planning at the start of the year, year-end planning is as important. Get a head start by downloading our Year-End Portfolio Checklist.

Next Comprehensive Financial Planning Steps

A new year is an opportunity for you to increase your wealth by proactively making financial adjustments. Comprehensive financial planning also sets you and your heirs up for prosperity.

Contact Adviser Investments anytime for assistance. We pride ourselves on being The Planner You Can Talk To.


Tax and legal information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice. Always consult a licensed attorney or tax professional regarding your specific legal or tax situation.
Our statements and opinions are subject to change without notice. All investments carry risk of loss and there is no guarantee that investment objectives will be achieved.

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