Markets

Mid-Year Money Check-Up

Updated on: June 14, 2011 / 8:32 AM EDT / MoneyWatch

Housing is in a double-dip; unemployment is at a still-high 9 percent; economic growth is slowing across the globe; and it costs about 40 percent more to fill your gas tank this year from last year. Since you can't do much about those broad issues, now seems to be a perfect time to revisit the financial issues over which you actually have control: your investments, retirement and other parts of those New Year's resolutions that are already gathering dust.

Investments: Quit complaining about the markets and DO SOMETHING. Remember that if you are a long-term investor, these pull-backs are great opportunities to rebalance your accounts so that your allocation remains in check. This requires that you override your emotional urge to keep winning funds and dump those that are lagging. But that's the point of asset allocation-the various funds are supposed to move in different directions at different points in the economic cycle.

Here are a few other tips:

Take a risk assessment questionnaire - try this one from Vanguard
Replenish cash for any bills that are coming up over the next year
Try to replace actively managed funds with index or exchange-traded funds
Book appointment with advisor/broker to review your progress

Retirement: Although Americans say they are worried about retirement, most have done no planning. A recent National Bureau of Economic Research survey found only 42 percent has tried to figure out how much to save for retirement. Among those who are 45 to 59 years old, only about half had yet to calculate how much they'll need. So step number 1 is to calculate your retirement numbers! You can jump on your plan's site or use one of these on-line calculators to see how close you are to hitting your personal retirement "number."

Here are recommended estimates for the inputs required:

Inflation assumption = 4.5 percent
Rate of return before and after retirement: 4-6 percent, to be conservative; 5-7 percent if you're feeling optimistic
Life Expectancy = 95 (you can jump on this site to get a better estimate of your specific life expectancy)

Real Estate: Home prices have tumbled 34 percent from the peak in 2006, which means that if it makes sense for you, now is a great time to be a home buyer. (Check out this rent vs. buy calculator for guidance.) If you are in the market, here are 9 Smart Home Buying Tips. For everyone else, here are some real estate to-do's:

Refinance now: If you haven't locked in today's historically low rates, it's time to take advantage of 30-year fixed rate mortgages that are still below 5 percent - use this re-fi calculator
Make sure property/casualty insurance is up to date

Insurance: Here's a conversation stopper: let's talk about INSURANCE! Don't click away-this is the part of your financial life where an error can cause huge damage to your family.

Life: Make sure you have enough (use this online calculator)
Disability: Enroll in your company's plan, if offered. If you are self-employed, shop around and apply for coverage!
Long term care: If you're over 50, time to shop around

Estate Planning: OK, I'm going to beg-PLEASE DRAFT A WILL, IF YOU HAVEN'T DONE SO! I prefer hiring a lawyer for a will (including guardianship instructions), power of attorney and health care proxy, but if the only way you'll get it done is with your computer, you can use a software program like Quicken WillMaker. Other estate tips include:

Revocable trust: If your total estate is greater than $5 million (at least for the next two years), a revocable or changeable trust, will shelter your unified tax credit against federal Estate and Gift taxes. You may also want a trust if you want more control over the disposition of your assets. Revocable trust assets are not subject to probate
Documents: All of your estate documents and final instructions should be stored in a safe place - don't forget to provide copies to your executor/trustee

Jill Schlesinger

Jill Schlesinger, CFP® is the Emmy-nominated business analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and chief investment officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.

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