As the year winds down, it's a great time to reflect on the goals you've set and to address any last-minute considerations. In this blog, we will discuss the important financial aspects to consider.
Investments
Now is a good time to review your retirement accounts, whether they’re through your employer or an individual retirement account (IRA). Are you contributing the maximum amount allowable under current laws? For 2024, consider making catch-up contributions if you're eligible. Individuals aged 50 or older may contribute additional amounts to certain retirement plans, which could be a useful way to bolster your retirement savings as the year ends. Make sure your asset allocations are aligned with your risk tolerance and financial goals.
Retirement Strategy
Are you on track to reach your retirement goals? If you haven’t already done so, this may be the perfect time to increase your contributions. Reviewing your retirement accounts annually allows you to adjust as needed, taking into account factors such as market conditions and changes in personal circumstances. Consider strategies like delaying Social Security to maximize your benefits, or if you’re 55 or older, looking into opportunities like Health Savings Account (HSA) catch-up contributions.
Taxes
Before December 31, it’s wise to connect with your tax advisor and review your tax situation. Take stock of any realized gains or losses from this year, as well as unrealized gains that may impact your tax strategy. If you’ve sold securities, make sure you have accurate cost-basis information. Don’t forget to evaluate loss carryforwards from last year, which could provide tax relief. If you’ve made large purchases or sold property, reviewing the tax implications now can help you avoid surprises next spring.
Charitable Gifting
2024’s federal gift tax exclusion allows you to gift up to $17,000 per individual without it counting against your lifetime estate tax exemption. This can be a valuable way to pass on wealth to loved ones or charitable organizations. Additionally, you may want to consider setting up or contributing to trusts on behalf of your family. Since trusts come with a complex set of tax rules and regulations, it’s a good idea to consult a professional before proceeding.
Life Insurance
As the year comes to a close, take the time to review your life insurance policies. Ensure that your coverage still meets your family’s needs, and verify that your beneficiaries are up to date. Also, review your premiums to make sure they fit within your current budget. If your life circumstances have changed—perhaps due to a new marriage, a growing family, or a new business—you may need to adjust your coverage accordingly. Remember that life insurance policies have various expenses, including mortality and surrender charges, so careful planning is important.
Life Events
Have you experienced any major life events in 2024? If so, these changes may have significant implications for your financial future. Consider any of the following:
- Marital status changes
- Relocation or buying a home
- Job changes or starting a business
- Inheritance or receiving gifts
- Expanding your family
These events may call for adjustments to your financial and retirement planning. While you may have already discussed these matters with your financial advisor, it’s important to bring them up in your year-end review to ensure your financial plan remains aligned with your life circumstances.
Conclusion
As you prepare for 2025, taking time to review your financial life can set you up for success in the coming year. Whether it’s maximizing your retirement contributions, reviewing your tax strategy, or updating your insurance policies, a year-end financial review is an essential step in maintaining your long-term financial well-being.
For personalized guidance, reach out to a financial, tax, or legal professional who can help you navigate the complexities of these decisions.
Sources: IRS.gov, September 2024
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