The New Year is upon us, and with it comes the promise of fresh opportunities.

If this is a year of potential change for you and your family, it is critical to have a transition plan in place to get from here to your new reality. As a sports fan and coach, I can tell you the surest way to lose is to fail to plan for transition. Most of our focus in life is on accumulation and retirement, but the in-between times can often make or break a financial plan. 

Below are the fundamentals to focus on in creating a transition plan:  

  • Have a buffer. Cash serves as a moat protecting your long-term investments from emergency needs. While conventional wisdom dictates having 6-12 months of living expenses in cash, those in transition often should have more on hand. Save at least that amount, and perhaps much more that if you plan on taking regular withdrawals.

  • Don’t go unprotected. Changing circumstances requires a look at your protection plans. Will you have to replace employer provided disability, life or health insurance? Have your needs changed?

  • Make purposeful, gradual changes for changing risks. Many approach retirement with either the same strategy for their long-term investments as they had during their work life, or make sweeping changes. While your changing circumstances may call for a new approach, make sure you consider how any changes will impact your future needs.

  • Know your expenses. What expenses will you have? Will there be new costs for the coming year and beyond?

  • Don’t overlook your taxes. Taxes are a major expense for us all and are easy to forget to plan for! In years where income is in flux it pays to have a plan in place. Retirees especially often have a year or two of transition that can provide once-in-a-lifetime opportunities to minimize taxes on retirement income. 

One area to avoid spending time on this January is speculating what will happen with the markets. Each year the pundits warn us of what’s to come, and each year they are spectacularly wrong.

More importantly however, the media elite will never know the details of your personal goals and risks. 

Having a plan isn’t about avoiding risk; rather, it is about taking known and calculated risks. It’s also about covering those risks in an appropriate way, given the entirety of your financial circumstances.

If you’ve never created a plan, a CFP® professional can help you make one, as well as survey your financial landscape for threats and opportunities. Make 2016 the year you finally contact a CFP® professional who is versed in all areas of finance.