Review Your Investment Mix.  Many investors retreated from the stock market in 2008, perhaps to the point where future inflation now has become a threat. Portfolios that were distorted by the decline of securities prices may need to be rebalanced to reflect your investment objectives. Take time to examine your investment mix, with an eye toward achieving some growth, as a hedge against inflation, while still preserving security of principal.

Revisit Your Healthcare Directives.  Your living will or healthcare power of attorney (proxy) should be reviewed annually to ensure that your needs and treatment wishes are unchanged – and that the person designated to make health care decisions for you is still willing and able to serve.   If you haven’t yet arranged for someone to make healthcare decisions if you are incapacitated, you can find standard forms for living wills and health care powers of attorney from your state medical association or at the following websites: National Hospice & Palliative Care Organization; Center for Practical Bioethics; U.S. Living Will Registry.

Maximize Your Retirement Savings.If you’re still working, try to contribute the maximum permitted to your IRA, 401(k) or other retirement plans.  For people over 50, the limit is $6,000 for IRAs and $22,000 for 401(k)s.  If your employer provides a partial match to your savings, contribute at least the amount needed to earn the maximum match. Ask your adviser about switching from a traditional IRA to a tax-free Roth IRA (see article in this issue).

Plan for Emergencies.Financial planners suggest establishing a fund that would pay living expenses for three to six months, in case your usual sources of income dry up.    The size of your fund will depend on such factors as family income, the number of income earners, your assets, debts and insurance costs.

Examine Your Estate Plan.It’s important that every will or living trust be reviewed and possibly revised periodically to reflect changes in your family and financial situations, new tax laws or other events.  For example you may have relocated to a state that has different “death tax” rules, or your executor may have died or moved away, or you now may wish to add a new beneficiary, such as the American Red Cross.  To make a small change in your will, you might need only a “codicil” (an amendment that will preserve most of the provisions of your existing will). In reviewing your estate plan be sure to consider transfers that occur outside your will, from joint ownership, life insurance, retirement plans and other beneficiary designations.

Make a Gift to the Red Cross.We hope you’ll continue supporting the American Red Cross as part of your 2010 planning. Your gift supports the lifesaving mission of the American Red Cross in your community, across the country and around the world. The rebound in the stock market makes it attractive to give appreciated securities, held more than one year.  You can deduct the full fair market value of your investment while avoiding all capital gains taxes.  As you review your retirement plan, consider making the Red Cross a beneficiary.  Leaving an IRA or other retirement plan benefits avoids both income taxes and “death taxes” that otherwise would be paid by your estate or heirs.  We would also be pleased to talk with you about gifts that provide lifetime payments to you or a family member.

To learn more about Gift Plan options, contact the Gift Planning Office at 1-800-797-8022, ext. 5, plndgiving@usa.redcross.org or log on to www.redcrosslegacy.org.