A Financial Review in Early 2023 Can Optimize Your Strategy
Look to build savings, reduce risk, minimize taxes and ensure a successful retirement by reviewing your budget, contributions, allocations and beneficiaries.

January is always a good time to do a financial review, but after last year’s tumult, it’s especially valuable.
In 2022, a year like no other, the stock market bounced up and down like a yo-yo and ended the year well below where it started. Inflation and interest rates shot up dramatically — good news for savers, but bad news for people who already owned bonds and bond funds, whose prices plummeted.
While the financial and economic landscape has changed dramatically in a year, you can find new opportunities and reduce your risk. Here are some tips.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Review Your Budget.
Review your income and expenses to make sure you're on track to meet your financial goals. Now is a good time to make any necessary adjustments to your spending or saving habits.
Review IRA, 401(k) and Other Retirement Plan Contributions.
If you haven’t fully funded your retirement plan(s) this year, consider what you can afford to salt away. Contributions to 401(k) and 403(b) plans reduce your taxable wages. It’s too late for 2022 contributions, as the deadline was Dec. 31, but you should look at your 2023 contribution levels. If you’re not contributing at all, consider starting. If you’re already contributing, consider increasing your contributions up to the IRS limit. This year, you can place up to $22,500 into your 401(k) or 403(b), up from the $20,500 limit in 2022. If you’re 50 or older, you can contribute an additional $7,500.
People who are eligible to make deductible contributions to an IRA can save on 2022 taxes by contributing by April 18, 2023. If you’re not eligible, consider saving in a Roth IRA, which has more liberal income limits.
Review Rates on CDs and Bonds.
When reinvesting money from maturing CDs or bonds, don’t automatically re-up. You may get a better rate elsewhere. Money market accounts, bank certificates of deposit and bonds now pay decent rates for the first time in years. But you may be able to do better.
Many people who choose CDs by default can get a higher rate with a fixed-rate annuity, which is especially suited for people in their 50s and older. The reason: If you withdraw money from an annuity before age 59½, you’ll normally owe the IRS a 10% penalty on the interest earnings you received.
Also known as a multiyear guarantee annuity or a CD-type annuity, this type of annuity behaves much like a bank certificate of deposit. Like a CD, it pays a guaranteed interest rate for a set period, usually two to 10 years. Unlike CD interest, annuity interest is tax-deferred until withdrawn.
While the top three-year CD paid 4.44% as of mid-January, you can find a three-year fixed annuity that pays 5.53%, and there are also higher rates on two- and five-year annuities. While annuities are not FDIC-insured, they are backed by well-regulated life insurance companies. Backup protection is provided by state guaranty associations. Check the insurer’s AM Best rating before you buy.
Review Your Asset Allocation and Rebalance if Necessary.
Before 2022, the stock market boomed for years, and you may find that your desired asset allocation is still off track. Suppose you had set your allocation as 50% in equities (stocks and stock funds) and 50% in fixed-income (bonds, CDs, fixed annuities, money markets and similar instruments). Even after last year’s decline, you’re now 65% in equities and 35% in fixed income.
Now it’s time to start reallocating to get back to 50-50. Reallocating money in tax-deferred retirement plans and annuities and life insurance policies takes a bit less planning because gains are not taxed until withdrawn. Some people have enough money in their retirement plans so that they can accomplish their overall rebalancing using only them. Remember, it’s your overall asset allocation that counts, not the allocation in any one account.
If you do need to rebalance your taxable investments, be aware of tax strategy. For instance, if you have unrealized losses, you can sell off losing investments to offset gains from selling your winners. If you’re rebalancing a lot of taxable money, you may want to consult a financial planner or tax expert.
If You’re in Your 50s or Older, Consider a Deferred Income Annuity.
Also called a longevity annuity, a deferred income annuity converts a lump sum deposit into a stream of payments that will start at a future date you choose. Most people chose the lifetime-income option. This will provide uninterrupted income as long as you live.
Make Sure Your Beneficiaries Are Up to Date.
The listed beneficiaries on annuities, life insurance policies and retirement plans will receive the proceeds on your death. Life changes such as marriage, divorce, the birth of children or grandchildren and the death of a loved one may require updating your beneficiaries.
If you’re married, your spouse is normally your primary beneficiary, and your child or children are contingent. If you’ve been divorced and remarried and your ex-spouse is still listed as the beneficiary, your intended heirs will get a rude shock when you pass.
Annuity expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed, and immediate-income annuities. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities. One of America’s top experts on annuities, he writes on retirement income and annuities regularly.
A free quote comparison service with interest rates from dozens of insurers is available at www.annuityadvantage.com or by calling (800) 239-0356.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Retirement-income expert Ken Nuss is the founder and CEO of AnnuityAdvantage, a leading online provider of fixed-rate, fixed-indexed and immediate-income annuities. Interest rates from dozens of insurers are constantly updated on its website. He launched the AnnuityAdvantage website in 1999 to help people looking for their best options in principal-protected annuities. More information is available from the Medford, Ore., based company at www.annuityadvantage.com or (800) 239-0356.
-
2025 Virginia Tax Rebates Coming Soon? What to Know
Tax Rebates Given a historic 2025 gubernatorial race, tax policy will remain a key issue for Virginians in the months ahead.
-
What to Know Before Flying With Your Pet
From documentation and TSA screening to carrier rules and airport relief areas, here’s what to know before taking your pet on a flight.
-
Trump Tariffs and Taxes: Waiting to See What Happens Is Not a Strategy
Like presidents, tariffs come and go. Policy changes also shift about every two years with the election cycle. If you're paralyzed by uncertainty, you could be missing opportunities to benefit your financial future.
-
Is a Family Office Right for You? The Multimillion-Dollar Question
As ultra-high-net-worth individuals increase in number, many are turning to family offices to manage their complex finances. Here's how family offices work, courtesy of a finance professional.
-
This Is How a Lot of Law School Students Are Cheating
Growing numbers of students are falsely claiming a learning disability to score more time to take tests. This has real-world consequences in which fellow students, law firms and their clients pay the price.
-
If You're Ignoring Private Markets, You're Missing Most of the Action
Private markets are becoming increasingly essential for all investors, not just institutions, and they are now more easily accessible thanks to innovative investment structures.
-
Three Ways Women Can Keep Caregiving From Draining Them Financially
Many women care for older relatives. While commendable, it could put their retirement at risk … unless they find a way to prioritize themselves.
-
I'm a Financial Professional: This Is the Roth Conversion Mistake Too Many People Make
Converting your traditional IRA to a Roth can be a fantastic tax-saving move, but you've got to be smart about two things: how much and when.
-
The Overlooked Generation: An Expert's Guide to How Gen X Can Finally Get Ahead
A perfect financial storm has been lashing this generation for years, but they still have time to get their retirement back on track with a few key moves.
-
Financial Advice and Retirement Confidence: What's Wealth Got to Do With It?
This retirement researcher notes that retirement confidence increases the most for those with access to advice who have a lower total level of savings.