11 End of Year Moves

11 End of Year Moves

I always joke that once Thanksgiving comes it might as well be the New Year.  We are all in full holiday mode and travel, family, shopping, and a myriad of other items are on our minds this time of year.  That said, we shouldn’t bury our heads in the sand and ignore our finances this time of year.  There are plenty of great end-of-year planning tips, tricks, and things to focus on to help ensure your finances are on track.

1 Top off your retirement plans–

Whether you are contributing to a 401(k), IRA, 403(b), or other retirement plan check the IRS maximums and adjust, if you are able, to hit the allowable maximum.  Now don’t forget if you turned 50 this year there are catch-up provisions that allow you to sock additional funds

2 Top off those H.S.As–

If you have a health care savings account, then get as much as you physically can into those accounts.  Triple tax benefits, can’t beat it.  There is still time to contribute and remember unlike F.S.As (flexible savings accounts) these are not use-it or lose-it type of accounts. 

3 Charitable contributions–

Raise your hands if you want to pay more in taxes?  Thoughts so, well good news there is still time to donate to your favorite charity.  You can even charge it to a credit card before 12/31 even if you want to delay paying it into the new year.  Conversely, perhaps this is a super high earning year, well perhaps consider a Donor Advised Fund which is a great way to get a large charitable deduction this year and can delay donating the funds to a specific charity as long as you’d basically like.  One other trick can be to donate low-basis stock to your favorite charity instead of cash to avoid ever paying cap gains on those funds.

4 Review those insurances–

Regardless of the type of insurance you have life, long-term care, disability, property and casualty, or any other insurance now is a good time to take an audit.  See what you have, and are you properly covered and are your prices competitive?  I know we all hate insurance, but it’s worth reviewing occasionally to keep them and you honest.

5 Do a 2025 Budget-

I’ve written many times about different ways to budget, and candidly I don’t care which way you choose.  But now is a great time to see what your 2024 expenses looked like and what changes are estimated for 2025 (up or down).  Then strategize accordingly.  For instance, I have a pretty good grasp on my monthly expenses, however, it is the bigger one-time expenses that I need to strategize for.  Such as vacations, kids camp, home improvements, and other items that don’t hit my normal monthly expenditures but expenses I know are coming and need to plan for.

6 2025 savings–

Part B of the budget conversation above is adjusting your savings rates appropriately for 2025.  Remember there are changes to the maximum you can save in these accounts next year, and if you are in that 60-63 range even additional ways to get more money away.  I find hitting the ground running come Jan 1 and adjusting to spread these savings throughout the year generally has the best success for people.

7 Kids College–

The end of the year is a great time to top off those college savings accounts.  If you haven’t looked at the cost of colleges lately brace yourself.  In any event, chances are every bit saved will go used so take a look and throw some discretionary funds here.

8 Run a model–

Great time end of year or beginning of the year after you take stock of things to get with your planner, ideally one at Diversified 😊, and have them update a model to see how you are trending to your longer term goals.  This can serve as a valuable resource to getting you on the right track and staying motivated to get there. 

9 Rebalance your investments–

Now is a great time to make sure your investments are allocated the way you want them to be.  Allocations likely have shifted throughout the year, and/or your risk tolerance has adjusted.  In any event, now is a good time to make sure you are appropriately allocated to reach your goals.

10 Estate planning–

Have you been dragging your feet to get those estate planning documents in place (think wills).  I know talking about our demise is always exciting, however better to plan and not need it here.  I can tell you if a tragedy strikes and these documents aren’t in place it can be a hellish process for you and your loved ones.

11 Tax loss harvest–

Now is a great time if you want to sell or pair some gains and losses in your investment portfolio.  By now you should have a pretty good feeling as to where your cap gains are trending for year-end.  Thus, a well-thought strategy as to being opportunistic here can really help you optimize taxes and your portfolio.

This should give you plenty to focus on in a relatively short amount of time.  Remember we here at Diversified take a lot of pride in all of these items and are happy to assist as much as possible.  That said, stay wealthy, healthy, and happy!