5 Financial Planning Moves for 2017

2017 promises to be a very interesting year. What will the Donald Trump presidency and the Republican majority in Congress mean for your taxes and your investments? No one can say for sure. But that’s why it’s so important to have an overall financial plan: to deal with uncertainty and be prepared for the unexpected.

With all the talk of tax rule changes in 2017, it’s tempting to “wait and see” and put off making financial planning decisions. However, it’s best to have a plan in place now, and make adjustments as things develop.

Here are 5 financial planning moves you can make now to get 2017 off to a great start:

  1. Beat the tax payment cash crunch

    Regardless of what tax rule changes we see in 2017, those winter/spring income tax payments and property tax bills can create a real cash crunch. Work with your tax preparer to set estimated tax payments and build these payments into your spending plan, so you can build up cash reserves and avoid a surprise need to raise cash for tax bills. If tax rates do fall later this year, you can always adjust your estimated payments in response.

  2. Target your income

    Under the current tax rules, there are some substantial tax advantages to keeping your income at certain levels. For instance, staying in the 15% tax bracket means a zero percent tax on capital gains. Based on President Trump’s proposed three tax bracket system, targeting your income for this current bracket would still be beneficial. 2017 or 2018 may bring some big changes in specific details of the tax code, but in any case, the financial planning strategy of trying to keep your taxable income to a minimum still makes sense.

  3. Position your investments and retirement distributions

    You can reduce taxable income for 2017 by positioning your taxable investments to be more tax efficient. For example, a great financial planning move if you’re still working is to defer income by upping your 401(k) contributions or by making tax-deductible contributions to IRA or HSA accounts. See our article, 3 Tax Saving Strategies for Your Portfolio for more information. Sometimes though, a more beneficial move would be to increase your taxable income. If you are well below the top of your target tax bracket, you may want to increase taxable dividends, sell investments to “harvest” the gains, or do a Roth IRA Conversion. If you’re retired, you can time your distributions from different accounts to optimize your income and tax planning (see our article, Your Finances in Retirement: Timing is everything).

  4. Control medical care costs

    While President Trump has vowed to repeal the Affordable Care Act, health insurance will probably look the same in 2017—including the premium increases. What can you do now? Aside from the obvious advice of making healthy choices this year, review your insurance plan to make sure it’s going to still be the best fit for you in 2017.If you are approaching Medicare eligibility, make sure you don’t fall behind the enrollment deadlines. See our article, Navigating the Medicare Maze. If you are already enrolled in Medicare and you are surprised by Medicare surcharges, you may be able to get the charges reduced by filing an appeal with the Social Security Administration. This is something we’ve helped a number of retirees with.

  5. Go Green

    We may not see many new renewable energy incentives, but there are still some good ones in place for 2017. The tax credit for renewable home energy systems covers 30% of the cost of solar electric and solar water heating systems, and there is no upper limit. Tax credits for all-electric vehicles are also still available. The Energy Star program is still active, and while some of the tax breaks have expired, some are still available. Of course, whether or not renewable energy products provide tax credits, they can still save you money by lowering your energy bills.

At Blankinship and Foster, we understand that there is so much more to managing your finances than just investing. We help our clients build integrated income and tax plans and adapt them for changes and uncertainty. To learn more about how we can help you implement strategic financial planning moves for 2017 and well into retirement, please contact us today.

About Jon Beyrer

Jon Beyrer, EA, CFP® is a partner of Blankinship & Foster LLC and is the firm’s Chief Compliance Officer. As a lead advisor, he focuses on helping families achieve their goals with sound wealth planning. In the community, Jon serves on several boards and is co-founder of the Professional Alliance for Children, a legal/financial charity for families of ill children. He has been quoted in The Wall Street Journal, The New York Times, and the Journal of Financial Planning. Jon lives in San Diego with his family.

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