New Year, New Goals
The start of the new year brings new beginnings, restarts, and refreshed goals. There are many facets of life we examine as we transition into a new calendar year: diets, exercise regimes, personal goals, finances, etc. One financial goal that you could aim to achieve in 2021 is the consolidation of financial accounts. Many of us suffer from “account sprawl”, meaning we have multiple similarly structured accounts spread across different investment platforms. This year, consider making it a priority to clean this up and simplify your financial life.
Major life events can be the catalyst for account sprawl. Starting a new job is an exciting time in life and could cause you to leave an old retirement plan or health savings plan behind as you start on new plans. Moving cities may cause you to find a new brick and mortar bank, but did you close out your previous bank accounts? Getting married can also be a life event that causes opening new accounts. There are many reasons why you could have fallen victim to account sprawl, but here is why it’s important to consolidate your financial accounts.
Why you should consider consolidating accounts in 2021:
Simplify your Life
I don’t know about you, but keeping track of online passwords could be a full-time job. The more financial accounts you have spanning multiple custodians, the more difficult it is to keep track of the account and password. Losing track of an account could cost you the money in those accounts. If there is no activity on an account for an extended period of time, it may be deemed dormant and turned over to the state as unclaimed property. On top of that, from an estate planning perspective, the simpler the better for your heirs.
It is common in the financial world to see frequent fees on inactive accounts. For example, old bank accounts may charge monthly or quarterly fees on accounts if there are no regular transactions taking place. You may also be paying an annual fee on your old and new 401(k) plan, doubling the fees you face.
Watch your Wealth Change
With bank and investment accounts spread out across multiple platforms, it can be hard to determine if your money is working for you. Is your wealth growing at an appropriate rate? Is it dissipating too quickly? Are your investments still appropriate and working as they are supposed to? When assets are not consolidated it becomes difficult to track it all.
Do you suffer from account sprawl? If so, 2021 may be the year to clean it up and simplify your financial life. We are happy to help you or a loved one with this process. Set up a time to meet with your financial advisor at Sharkey, Howes and Javer to create a plan to simplify your life!