Ending the Year Intentionally
As the end of the year approaches, many of us find ourselves balancing reflection, preparation, and a long list of to-dos, both personally and financially. It’s a natural opportunity to step back, evaluate where we are, and think intentionally about what comes next.
This season of planning, goal setting, and fresh starts also provides the perfect opportunity to take a closer look at your financial life. Even a few thoughtful steps before December 31st can help ensure your financial plans, priorities, and documents remain aligned as you head into the new year.
Finish the Year Strong Financially
Maximize Retirement Contributions
Review your contributions to retirement accounts such as a 401(k), 403(b), or IRA. If possible, consider increasing contributions before year-end to take advantage of potential tax benefits and long-term growth opportunities.
For many people, this is also a practical time to make those adjustments. Year-end bonuses or pay increases can provide a natural opportunity to revisit your savings rate. Gradually increasing contributions alongside raises or bonuses can help build long-term savings while making the adjustment feel more manageable.
For those age 50 or older, there may also be an opportunity to make catch-up contributions before December 31st.
Review Required Minimum Distributions (RMDs)
If you are subject to Required Minimum Distributions, year-end is an important time to confirm that your RMD has been satisfied. Missing an RMD deadline can result in significant IRS penalties, currently up to 25% of the amount not withdrawn, making this a critical item to revisit before December 31st.
For some retirees, RMDs may also create planning opportunities. Qualified Charitable Distributions (QCDs), for example, allow eligible individuals to donate directly from an IRA to a qualified charity, potentially satisfying a portion of their RMD while reducing taxable income. For individuals who are already charitably inclined, this strategy can provide a meaningful way to support organizations and causes that are important to them while also improving overall tax efficiency.
RMD rules can be complex, so it’s important to review your distribution strategy regularly and make sure it still fits your overall financial plan.
Evaluate Your Investment Portfolio
Market conditions, economic environments, and personal circumstances can all change over time, making it important to ensure your investment strategy still aligns with your goals, risk tolerance, and overall financial plan. Year-end can provide a convenient opportunity to confirm whether your investment approach continues to support your long-term objectives.
It can also be a helpful time to step back and review tax planning opportunities before the end of the year.
Be Proactive About Tax Planning
A review of these areas now may help reduce your current tax burden, avoid surprises during filing season, and create opportunities for longer-term financial efficiency.
Income and Tax Withholding
Review whether your current tax withholding aligns with your expected income for the year. Major life or career changes, such as bonuses, job transitions, investment income, or retirement distributions, can impact your overall tax liability more than expected.
Tax-Loss Harvesting Opportunities
If you have taxable investment accounts, the end of the year may present opportunities to offset capital gains by strategically realizing investment losses. This approach may help improve overall tax efficiency while maintaining a long-term investment strategy.
Charitable Giving Strategies
Beyond Qualified Charitable Distributions, year-end can also be a natural opportunity to consider other charitable giving strategies. Depending on your financial situation, options such as donating appreciated securities or consolidating contributions into a single tax year may help support causes you care about while also offering potential tax benefits.
Roth Conversion Opportunities
Converting traditional IRA assets to a Roth IRA may be worth considering in certain situations, particularly during lower-income years or periods of market volatility. Because a conversion may trigger taxes in the year it occurs, it’s important to review the strategy carefully. Year-end may be a useful time to evaluate whether this approach fits your broader tax and retirement planning goals.
While tax planning is often associated with filing returns in the spring, many effective strategies must be implemented before December 31st. Taking time to review these opportunities now can help position you more effectively for both the current year and the years ahead.
Beyond investments and taxes, year-end is also a good time to review the financial and legal details that help protect your family and long-term intentions.
Update Beneficiaries
Beneficiary designations are one of the most important, and most commonly overlooked, parts of a financial plan. Retirement accounts, life insurance policies, annuities, and certain investment accounts generally pass directly to the beneficiaries listed on those accounts, regardless of what may be written in a will or other estate planning documents. That makes it especially important to review beneficiary designations after major life events such as marriage, divorce, the birth of a child or grandchild, or meaningful changes in financial priorities, and to make sure they still reflect your current wishes.
It’s also important to confirm that both primary and contingent beneficiaries are properly named, and their contact information is up to date. While these may seem like small administrative details, keeping them current can help reduce confusion, delays, and unnecessary stress for loved ones in the future.
Review Estate Planning Documents
Estate planning is not a one-time event. Over time, changes in family circumstances, financial priorities, and even legislation can impact whether your current documents still reflect your wishes.
Year-end can be a good opportunity to revisit important documents such as your will, trusts, powers of attorney, and healthcare directives to ensure they remain aligned with your goals and current situation.
It’s also important to confirm that the individuals named in these roles are still appropriate and willing to serve if needed. This can help provide clarity for loved ones and reduce unnecessary complications during already difficult times.
Finally, year-end planning is also about looking forward and making sure your daily financial habits continue to support your broader goals.
Prepare for the Year Ahead
Reassess Spending and Savings Habits
The end of the year is a great time to review spending patterns and identify opportunities to improve cash flow, reduce unnecessary expenses, and better align your financial habits with your long-term priorities.
Revisit Financial Goals
Finally, take a moment to reflect on your broader financial priorities. Whether it’s retirement, education planning, purchasing a home, or building emergency savings, revisiting your goals can help you enter the new year with greater clarity and confidence.
Final Thoughts
Year-end is an important checkpoint, not just for looking back, but for positioning yourself for what’s ahead.
Not every part of this checklist will be relevant to your situation, but even a few thoughtful steps may have a meaningful impact over time. If you have questions or would like help reviewing your year-end planning opportunities, the team at Howe & Rusling is here to help.
Disclosure: This material is provided for informational and educational purposes only and should not be construed as investment, tax, legal, or accounting advice. The information presented is general in nature and may not be applicable to every individual’s circumstances. Readers should consult with their financial, tax, and legal professionals regarding their specific situation before implementing any planning strategy. The discussion of retirement contributions, Required Minimum Distributions (RMDs), Qualified Charitable Distributions (QCDs), Roth conversions, tax-loss harvesting, charitable giving strategies, beneficiary designations, estate planning documents, and other planning concepts is intended solely for educational purposes. Tax laws, IRS regulations, contribution limits, eligibility requirements, and estate planning rules are subject to change and may vary based on individual circumstances. Examples discussed are hypothetical and are provided for illustrative purposes only. No representation is being made that any investor will achieve similar results or that any planning strategy will be successful. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Asset allocation, diversification, rebalancing, and other investment strategies do not guarantee a profit or protect against loss in declining markets. Howe & Rusling, Inc. does not provide legal advice. Estate planning documents, including wills, trusts, powers of attorney, and healthcare directives, should be reviewed with qualified legal counsel. Howe & Rusling, Inc. is an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training. Additional information about Howe & Rusling, including its Form ADV Part 2A, is available upon request or at www.adviserinfo.sec.gov.
