Ten Year End Financial To-Dos

The end of the year is the perfect time to reflect on your life and to plan ahead, and it goes for all areas of your life including your financial life. A little bit of time doing some financial housekeeping at year-end may help put you in a better position today, and also for your retirement in the future.

1. First, make sure you’re maxing out your retirement accounts. If it’s company sponsored, check your annual limits (a 401(k) is $22,500 with a $7,500 catch up) and squeeze in as much as you can before the end of the year. Also make sure that you’ve reached enough to get the full employer match if possible.

2. Consider a Roth Conversion if it’s a fit for your situation before the end of the year. When making this decision, you’ll need to see where you stand for taxes and likely talk to an accountant or a financial advisor.

3. If you’ve got an HSA or health savings account, make sure you’re taking full advantage of it as these accounts offer triple the tax advantage. Meet the allowable maximum for the year if possible, and if you have excess dollars in there put them into the investment arm of your HSA.

4. Similarly to an HSA, and FSA is meant to be spent on healthcare expenses, but these accounts are often use-it-or-lose-it for the year, so make sure you’ve spent what you can for the year before the funds expire.

5. If you’re RMD eligible (age 72 or 73 depending on your birth year), it’s critical that you’re taking your required minimum distribution or RMD before year end. There’s a penalty if you don’t take them, so take the distribution and if you don’t need to use the funds, reinvest them in a non-retirement account.

6. Year end is a great time to do tax planning, and to ensure that you made all of the estimated tax payments that you may have needed to throughout the year. Be proactive for the year ahead and take this time to plan for how you’ll handle taxes next year.

7. It’s the holiday season and it’s synonymous with giving, just make sure to keep track of your charitable contributions. You can even charge and pay them in the new year, or transfer stocks to a Donor Advised Fund, which will all credit for your 2023 taxes.

8. Adjust your savings and investing amounts for the year ahead by increasing deferral and withdraw amounts for the year ahead. A simple 1% increase can make a big difference in both your savings and investment accounts especially as they compound over time.

9. Take time over the end of the year to review your finances, your budget and your goals to make sure you’re on track. It’s a good time to take a look at everything from your investments to your insurance and double check that you have everything you need.

10. Speaking of budget, review your expenses and see if you overspent anywhere in 2023 that you want to adjust in 2024. You may find that you could cut back on subscriptions or services that you no longer want or need next year. You may also take a look and determine that you want to adjust your goals for the coming year, or as you get closer to retirement.

Taking a little bit of time as the year winds down can help you to put yourself in a better position for smooth financial sailing next year.

By Andrew Rosen, Contributor