Lifestyle & Culture

5 “To-Do” Financial Planning Items for 2021

Now that 2020 is in the rearview mirror, we look ahead to this upcoming year. We want to look ahead and send the “to-do” Financial Planning items that need attention.  What are 5 things that we can do today that will have a positive impact on our finances and make this year much better than the last?

Consider refinancing your mortgage with rates at historic lows

During the holidays, I found myself having a similar conversation with family, friends, and people at the checkout counter at the grocery store.  That conversation is looking to refinance your existing mortgage.

This is the best opportunity we’ve seen to lock in what is most likely the largest debt you have, at historic lows.  But don’t just take my word for it.  People across the country know what a good deal this is as refinance applications are up 88% over the last year.

So when would refinancing make sense for you?  Generally, if the quoted rate that you get from the bank is 0.75% lower than your current interest rate, and you plan on staying for you are for the next couple of years, then it would be advantageous to refinance.

There is no downside to having a conversation with your mortgage provider about refinancing but the upside could be thousands of dollars each year! 

Explore contributing to a Health Savings Account (HSA) or Flexible Savings Account (FSA)

When talking to people (and most likely younger people), it’s common to hear that they don’t save for a Health Savings Account (HSA) or a Flexible Savings Account (FSA).

If you have a high deductible health plan, it might make sense to contribute to an HSA.  With an HSA, you can contribute up to $3,600 for yourself ($7,200 for a family plan).  The money is deductible for your taxes, grows tax-deferred, and also is withdrawn tax-free if used for medical expenses.  Also, if you don’t use the money, it can be saved and possibly invested until you are ready to use it.

However, let’s say you don’t have a high-deductible health plan.  You can contribute to an FSA if your employer allows this option through their healthcare plan.  Here it is similar where the contributions go in pre-tax and withdrawals are tax-free if used for healthcare.  The main exception is unlike the HSA, you cannot save your contributions and any money you don’t use by year-end will be forfeited.  If you use this option, please know the amount you have left before year-end.

Take a closer look at your credit cards

Pop quiz: 

  • What is the interest rate on your credit card?  You’re not sure. 
  • Ok, what are the reward benefits you get from your credit card?  You got some but don’t know the specifics. 
  • The last question, is there a better card for you based upon your spending habits? 

Don’t feel bad.  A lot of people are in the same boat as you.  We have credit cards that we use but we don’t know the interest rate, we don’t know the rewards we get, and we have no idea how to compare what cards are available.

One website that can help is  Here you can look up your existing credit cards, compare them to other cards that are available, and also look to see which cards get you the most rewards based on your spending habits.

One thing to note if you do switch cards, try to keep your old credit card open if you’ve had it for a long time as this credit history directly impacts your credit score, and closing the card could lower it.

Understand Medicare coverages

Understanding Medicare can be difficult but let’s walk through this together.  Eligibility for Medicare begins when you turn 65.  To enroll for Medicare, you can do this 3 months before the month you turn 65 and 3 months after the month you turn 65.  So if your birthday is in April, you could enroll for Medicare beginning on January 1st and would have until July 31st.  Basically, it’s a 7-month window to enroll.

Now here is where it gets tricky.  If you are 65 AND still working AND covered by a group health plan then you can delay enrolling in Medicare without penalty.  The other scenario is if your spouse is still working and is covered by a group health plan then you can also delay enrollment without penalty.  Once you separate from service or your health coverage ends, you will have a special enrollment window to sign up.

Lastly, and this is important, if you are covered by a health plan, you can still sign up for Medicare Part A ONLY since it is free and can be a secondary insurer for hospital care.  Please keep in mind that if you do this, you would be allowed to contribute to a Health Savings Account that we discussed above.

Look at the Social Security strategy that works best for you

Filing for Social Security is one of the biggest decisions you will make on your retirement plan.  You can file as early as 62 (but get reduced benefits), file at Full Retirement Age (between age 66-67), or file as late as age 70 (and get enhanced benefits).

To get a better understanding of your options, you can get a copy of your Social Security statement at and request a copy of your statement.

Generally, if you file for Social Security at age 62 if you will get a reduced benefit of about 25% less than your full retirement age amount.  Yes, you will be getting the money sooner but with life expectancies increasing, it’s a strong possibility that the correct financial decision is to wait until at least full retirement age and not take a reduction in benefits.

Also, if you have funds that can last you the first couple of years of your retirement, then it might make sense to delay benefits until age 70.  Yes, you will be waiting longer to get benefits but you will also get an 8% boost to your benefits each year you wait past full retirement age past age 70.

Lastly, if you are working and thinking about taking Social Security before full retirement age, you might want to hold off as some of your benefits might be withheld. 

If you are working and file for Social Security benefits before full retirement age, then once you earn above $18,960 you will have $1 of Social Security withheld for every $2 you earn above $18,960. 

If you would attain full retirement age this year, then the limit increases to $50,520 and above that, you would have $1 in Social Security withheld for every $3 you earn above $50,520.

This can be easily confusing so please do your due diligence and understand your options before making your decision.

Overall, this is a list of 5 things you can look at today to help your finances.  There are many other items and areas worth looking at.  If you would like to take a deeper dive into this, please feel free to reach out to us at [email protected] and we would be happy to answer your questions.

Happy New Year!

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