20 Financial Moves for Year End

It’s hard to believe 2023 will be winding down in less than two months. Year-end is a great time to review your overall financial situation and make both tactical and strategic moves to optimize your finances for the year ahead. Here are twenty financial planning moves you should consider making at the end of the year:

1. Review Your Budget:  Review spending versus income over the last year. Take steps to ensure that your budget aligns with your financial goals. Make adjustments as needed to reflect any changes in income, expenses, or financial priorities.
2. Review Retirement Contributions: Contribute the maximum amount you can into retirement accounts, such as a 401(k), 403(b), and/or an IRA. These contributions can help reduce your Adjusted Gross Income (Read: taxable income) and boost your long-term retirement savings.
3. Tax-Loss Harvesting: Ideally, this is an activity that investors do throughout the year, but at year-end it is particularly important to review your investment portfolio and consider selling investments that have experienced losses to offset gains and minimize capital gains taxes.
4. Contribute to Health Savings Accounts (HSAs): If you utilize a High-Deductible Health Insurance Plan, you are eligible and should contribute the maximum allowable amount to an HSA. Contributions to HSAs are tax-deductible and can be used for qualified medical expenses. Best case scenario, you don’t actually use the contributions in the current year for health expenses, you let them grow. If you use the money in the HSA for qualified medical expenses, the distributions are 100% tax free. The HSA contribution limits for 2024 are $4,150 for self-only coverage and $8,300 for family coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution.
5. Charitable Donations: Make charitable contributions to qualified charity, (501(c) (3) organizations), before year-end to potentially qualify for a tax deduction. Be sure to keep detailed records of all your donations.
6. Take your Required Minimum Distribution(s): RMDs come with a 50% tax penalty if they are not taken in the year that they are required. Legislation such as the Secure Act 2.0 can impact when individuals must begin taking distributions. Be sure to check whether you have taken your distribution before it is too late.
7. Evaluate Your Investment Portfolio: Review your investment portfolio to ensure it aligns with your risk tolerance and any appropriate timeframes. Rebalance or reallocate your portfolio if necessary.
8. Use Your Flexible Spending Account (FSA) Funds: If you have an FSA, check the deadline for using the funds. Spend them on eligible medical expenses, childcare, or other approved expenses to avoid losing the money. HSA money can stay in account year after year, however, a FSA needs to be distributed.
9. Annual Enrollment: Companies often add, subtract or change benefits on an annual basis, and it is important to review what is offered to you through your company’s benefits center.
10. Check Your Credit Report: Request a free credit report and review it for any errors or discrepancies. Correct any inaccuracies to maintain a healthy credit score.
11. Re-visit Financial Goals: Establish or update your short-term and long-term financial goals.Having clear objectives can help you stay focused and motivated. What do you want to accomplish this year? In 5 years?
12. Estate Planning: Review your estate plan, including wills, trusts, and beneficiary designations. Ensure they reflect your current wishes and circumstances. It is also important to periodically engage with your Financial Advisor and Estate Planning attorney to see if any law changes will impact how your wishes will be carried out.
13. Set a meeting with a Financial Advisor: If you have a financial advisor, schedule a year-end meeting to review your financial plan, investments, and make any necessary adjustments.
14. Evaluate Insurance Policies: Review your insurance coverage, including health, auto, home, and life insurance. Ensure you have adequate coverage and make any necessary changes.
15. Maximize Tax-Advantaged Accounts: Contribute to tax-advantaged accounts like 529 college savings plans or Coverdell ESAs for educational expenses, and ABLE accounts for disabled individuals.
16. Plan for Bonuses: If you expect a year-end bonus or profit-sharing, create a plan for how to save, spend or invest these funds wisely.
17. Consider Roth Conversions: Evaluate the potential benefits of converting traditional IRA funds to a Roth IRA, which can provide tax-free withdrawals in retirement.
18. Evaluate Debt: Review your outstanding debts and create a strategy to pay down high-interest debts more aggressively if possible. This ties in with annual budgeting and can help to improve your overall financial fitness in the new year.
19. Secure Important Documents: Organize and store important financial documents in a secure location, and ensure your loved ones know how to access them.
20. Update Beneficiary Designations: Review and update beneficiary designations on all investment, checking, savings, retirement accounts, insurance policies, and other assets to ensure they reflect the overall plan that you have in place.

One piece of advice – Don’t wait until the last minute! Just as many of us get busy with things like holidays, family, or travel, financial firms also get very busy. Any transactions whether it is a gift, contribution to an IRA or an RMD distribution, it’s best to do it sooner than later.

Consult with a financial advisor or tax professional to help you make the right decisions based on your specific financial situation and goals. Year-end financial planning can help you start the new year with a new feeling of financial control and confidence.

This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website.