Year End Financial Checklist
Achieving your dream retirement requires you to take regular steps to make sure your financial plan remains effective. The end of the year is an excellent time to reflect on what you’ve accomplished and get on track to start the new year fresh. During this process, don’t forget to review your financial plan.
Your financial plan needs to be updated each year to account for changes in your goals and financial situation. That’s why we’ve created this helpful checklist to help you wrap up the year and start the next one in a position to succeed.
Use the form below to download the printable checklist:
Review Your Investments
At the end of the year, it is wise to review your investments to ensure they still align with your unique goals and situation. This is especially important if your financial or family circumstances have changed.
To ensure your investments are on track for the new year, be sure to meet with your financial advisor. They can help you adjust your financial plan and portfolio to match your new situation. An effective advisor will also work with you to put your goals into words and adjust your investments to help you accomplish them.
Make Final Contributions and Distributions
Both 401(k)s and 529 plans from several states have December 31st contribution deadlines. If you have one of these types of plans, be sure to complete planned contributions by the end of the year. Proper timing of deposits allows you to take advantage of contribution limits and receive your largest tax break.
On the other hand, Health Savings Accounts [HSAs] and Individual Retirement Accounts [IRAs] allow you to contribute until your tax filing deadline. However, you may still prefer to make these contributions in the current year for recordkeeping and budgeting purposes.
Distributions from investment accounts – including 401(k)s, HSAs, IRAs, and brokerage accounts – are generally taxed in the year that you take a distribution. Keep in mind that the distribution occurs when the money leaves the account, not when you sell an investment. Therefore, if you want a distribution to count toward your 2024 taxes, be sure to request the withdrawal with plenty of time to spare.
Make Charitable Contributions and Gifts to Reduce Taxes
Charitable contributions must be completed by the end of the year to count toward your current year taxes. For this reason, you’ll need to make all your planned donations prior to December 31st to capitalize on tax benefits.
If you plan to give cash or valuable items to friends or family, you may also need to consider the annual gift tax exclusion – a set amount that you can give to each person in a given year without triggering gift tax or using your estate tax exemption. To take advantage of the annual exclusion, be sure to deliver your gifts prior to the end of the year.
Don’t Forget Your RMD
Required minimum distributions [RMDs] must be taken by December 31st each year for those required to take them. The only exception to this rule is the first year you are required to take an RMD during which you can delay the distribution until April 1st.
You could face a tax penalty if you miss an RMD, so be sure to request your distribution on time. In addition, distributions are often slightly delayed to account for processing and settlement, so keep this timeframe in mind when taking your distributions.
Review Government Benefits
If you have already begun receiving Social Security or Medicare, review your program details by the end of the year. Most importantly, pay special attention to changes that have been made to your benefits, as they could create uncomfortable surprises if you are unprepared.
For Social Security, review the annual Cost of Living Adjustment [COLA] that will take effect in January. This adjustment increases your benefits based on inflation.
For Medicare, review the changes to premiums and deductibles. You will also need to review your Medicare supplement plan since costs and coverage can change each year. If you need to make changes to your Medicare coverage, you can do so during open enrollment which runs from October 15th through December 7th.
Create a Plan for Next Year
It’s very important to review and update your financial plan at the end of the year. A part of this process is verifying your budget to compare actual spending, income, and savings to your goals. Once you have a clear understanding of your financial position, you can adjust your budget for the upcoming year.
While budgeting is important, it is only a fraction of your financial plan. You’ll also need to work with your financial advisor to review your estate plan, tax liabilities, insurance coverage, investments, and much more.
Get Your Financial Fingerprint® from Brookstone Wealth Management
As you undertake the tasks you need to complete by year-end, turn to the experienced team at Brookstone Wealth Management for support. We can help you wrap up your finances for the current year and create a plan to start the new year in a strong financial position.
Our comprehensive wealth management program, Financial Fingerprint®, helps you stay on track for retirement – no matter the time of year. This innovative financial plan is quick to assemble, easy to understand, and simple to modify as your circumstances change. It also accounts for the most important aspects of your financial life including saving, investing, and managing your benefits from Social Security and Medicare.
With Financial Fingerprint® and an ongoing relationship with an experienced financial advisor, you can manage your finances with ease. To get started, contact us today.
