As the fourth quarter of 2023 is winding down, we want to share some best practices and tips for your year-end financial planning. Personally, this is my favorite time of year to self-reflect and review my progress. What goals did I set for myself and my family? How well did I meet my goals and what can I do to reach any outstanding goals before December 31st? Here is a checklist of some financial planning action items to consider before year’s end:
- Retirement Planning: Did you set a goal for retirement dollars you wanted to save this year? The annual limit for 401(k)s in 2023 is $22,500 with a $7,500 additional catch up if you’re over age 50. These contributions must be made through payroll by the end of the year so coordinate with your benefits provider on how to maximize these.
- Employee Benefits: For many organizations it is open enrollment time. What benefits did you use this last year and what will be needed for the upcoming year? This may include picking between high deductible or low deductible health plans, maxing out your health savings account (HSA), or using up flexible spending account (FSA) dollars. As a reminder, HSA funds roll over, but FSA dollars are use-it-or-lose it by 12/31 each year.
- Estate Planning: Did you complete your estate planning documents this year? Don’t let another year go by without putting these crucial documents into place. Also, review your beneficiaries on your various accounts (checking, savings, retirement plan, life insurance, etc.) to ensure your designations still align with your wishes.
- Legacy Planning: Each year you can make gifts to individuals to utilize the annual gift tax exclusion. For 2023, this is $17,000 per person, or $34,000 per person for a married couple.
- Tax Planning: Now is a great time to touch base with your CPA or tax preparer to discuss the details of your tax situation for the current year. From this, you may be able to utilize tax loss harvesting and/or complete a Roth conversion. Check out the linked blog posts for more information on these strategies.
- Investment Management: Many investors are currently experiencing what we call “investor fatigue.” Touch base with your financial advisor to confirm that your asset allocation and risk tolerance are aligned. If not, you may want to discuss an account rebalance.
- Personal Finances: What were your spending and savings goals this year? As you close the tax year, be intentional and proactive with your cash flow. Review your savings account rates and consider if there are opportunities available to increase interest received in these accounts. Did you anticipate paying off debts like student loans this year? Student loan interest is accruing again, so you might consider paying off this debt.
- Charitable Giving: If you’re looking to give charitably for the 2023 tax year, do so by December 31st. You may also consider “bunching” your charitable giving or utilizing a donor advised fund.
If you’re looking at this list and wondering how to find the time to complete these tasks during the already busy holiday season, I understand. My advice is to make sure you assemble a quality team to help you. This can include financial planners, financial advisors, insurance professionals, estate planning attorneys, and tax professionals. Connect with our team to discover how we can partner with you and your other trusted professionals to achieve your financial goals. Here’s to a prosperous 2024!
Listen to our podcast on End of Year Planning here.
Brooke Cassady
RB2023-1114