How to Turn Your Tax Season Paperwork Into a Retirement Planning Checkup

If you are like me, you dislike April 15 because that's the "big day" for taxes. But the day looms large well before it arrives. Indeed, starting at the end of the previous year, you begin collecting all the documents you need to complete the tax forms by the final deadline. Don't waste that effort because you can turn the process of doing your taxes into an annual financial checkup.

What do you need to do your taxes?

There are some basics you need for tax purposes so you can properly calculate your income from the previous year. The most obvious source of income is the money you earn from working. However, that's not the only source of income that matters. You also need to provide information about interest, dividends, and capital gains. These items all speak to your taxable savings.

Image source: Getty Images.

You'll also need to have information about any money you've put into tax-advantaged saving accounts during the year. And, if you are like me, you put your end-of-year account statements into the tax pile, too. In other words, hidden in the stack of tax documents you've likely collected is the full picture of your current financial profile. Once you've completed your taxes, use that information to your advantage and do an annual checkup on your retirement plan.

Lay it all out and keep track of it over time

I keep a spreadsheet to track my financial situation. After I've done my taxes, I add a year to the sheet and do some simple data input to assess my net worth. It is broken down by account, so I see what's in my taxable accounts and what's in my tax-advantaged accounts. Since I do this every year, I can see how my financial picture has changed over time, as well. If you are aiming for a particular financial goal, say having $1 million in retirement savings, you can see how close you are to achieving it.

That's the big picture view. Don't forget that you'll have all those detailed end-of-year statements. This is a good time to sit down and take a close look at what you own. If anything on the list has become a problem, you can identify it and decide what to do about it. And since it's still early in the year, you can think about how your decisions will impact your 2026 taxes and what to do about it (such as harvesting some losses to offset gains).

None of this is rocket science, but for many people, it is undesirable work. However, if you are doing more than half the work just to get your taxes done, it makes it that much easier to put in the extra effort to use the same basic information to see where you stand financially. Make the effort once, and you'll likely find it much easier to keep doing it year after year, turning tax season into a much more rewarding effort.

The Motley Fool has a disclosure policy.