There are several corners of your financial life that can be simplified through consolidation. Retirement accounts are one of those areas. If you’ve worked for several employers during the course of your career, you’ve probably acquired a few retirement accounts along the way. Accumulated assets left in a former employer’s retirement account are still yours, but they sometimes offer less investment flexibility. If you like the idea of having fewer accounts to keep track of, or if you prefer to actively manage your retirement dollars, consider consolidating stray 401(k) and IRA dollars by rolling them into a centralized retirement account. There’s a lot to consider when it comes to rollovers so it’s important to weigh all of your options carefully. (Consider a direct rollover, as withholding tax and tax penalties may apply for cash withdrawals.)
Credit cards and debt are two other areas where consolidation may be wise. Is it time to chop up the card that carries a hefty annual fee? Are you carrying a credit card balance that is snowballing due to high interest rates? It may be financially advantageous to pay off the cards with the highest interest rates and either close the account or put it away for emergency use only. It’s a relief to have fewer cards to manage, along with a plan for extinguishing debt.
As you sort through your financial choices, enlist the right team of professionals to assist you. Helpful professionals may include a tax advisor or an accountant, who can provide guidance on how to put you in the best tax situation, and a lawyer who specializes in estate planning. Also consider consulting a financial advisor who can help you streamline your financial life and accelerate your financial goals by recommending specific strategies based on your individual situation. Each of these professionals can share their expertise with you and help you eliminate unnecessary financial clutter.