The end of the year flies by. One day, you’re eating turkey and pecan pie and taking a well-deserved nap. Next thing you know (or so it seems), you’re counting down the New Year’s clock to welcome 2025.

If you’re not careful, the holiday season will fly by (in a sleigh?) before you can do these 5 intelligent things in your financial plan.

Conduct a Year-End Financial Review

Every year, I run a year-end financial review. A year-end financial review looks back and summarizes seven important areas:

• Spending (including Unexpected Expenses)
• Income
• Saving
• Net Worth
• Investing & Allocation
• Insurance and Estate Planning
• Progress on Previous Goals

You can’t manage what you don’t measure, and the year-end financial review acts as the ultimate barometer for your financial year. Here’s an article with more detailed thoughts on a year-end financial review.

Tax Planning

“Tax planning” is the process of organizing your tax situation this year, next year, and in many subsequent years, with the ultimate goal of minimizing your overall tax burden while remaining squarely within the tax law. We do not promote tax evasion on The Best Interest.

What are some examples of tax planning?

Do you have capital gains? Can you harvest them in 2024 at a conveniently low tax rate? (that’s a question specific to your unique tax situation)

Do you have capital losses? In this market?! I’m not sure how. But you might. Can you harvest those to offset gains? Although, as I’ve written before, this isn’t as useful a tool as many people think.

Do you plan on giving to charity? In what amounts? Depending on your current and future tax situations, would a donor-advised fund make sense? In a nutshell, a donor-advised fund allows you to make many years of charity contributions all at once, claim a current-year tax deduction for those contributions, and, as long as your charity accepts them, you can do so using appreciated stocks. You don’t pay capital gains tax, and neither does the charity (as a tax-exempt non-profit). It’s a triple-whammy. You do good. You reduce your current year income tax. You wipe away future capital gains tax.

Are you in a position to conduct Roth conversions? The “Roth” descriptor is red-hot right now, and many people are asking me Roth-related questions. Here are two articles all about Roth conversions:

• Should You Consider Roth Conversions?
• The Powerful Benefits of Roth Conversions.

Age-Based Concerns

The financial planning world is full of age-based concerns, where different rules and regulations start or stop as you age. I’m sure I’m missing some things from this list below – please, let me know!

I recommend you scan this list and see what ages you’re approaching. Be aware of the changes that might come soon.

• Age 26: you can remain on parents’ health insurance until 12/31 of year you turn 26
• N+5: There are multiple “5-Year Rules” that apply to Roth IRAs. The two most common are:
  • You can withdraw Roth IRA earnings penalty-free 5 years after your first contribution is made, assuming you’ve reached age 59.5
  • You can withdraw Roth IRA conversions penalty-free 5 years after the conversion is made
• Age 50: can make “catch up” contributions to Retirement accounts
• 50: certain public-service employees use the “rule of 50” (see “rule of 55” below)
• 55: the “rule of 55” for penalty-free 401k/403b withdrawals (be wary, though, you don’t want to mess this up)
• 59.5: penalty-free IRA and 401(k)/403(b) withdrawals
• 62: can file for Social Security benefits (at lower rates)
• 63.5: the “bridge to Medicare” – COBRA benefits can cover 18 months til age 65
• 65: eligible to sign up for Medicare three months before turning 65
• 65: withdraw HSA funds penalty-free, even if not for medical reasons
• 66-67: reach “full retirement age” for Social Security benefits
• 70: Max Social Security age. If you haven’t yet, file now. There’s zero benefit to waiting longer.
• 73: Required Minimum Distributions (RMDs) begin

Max’d Out Contributions?

Each year presents a new, finite opportunity to contribute to tax-advantaged investment accounts. If you don’t use your annual opportunity, you lose it.

Take a look at your IRA. Are you on track to contribute $7000 this year (or $8000 if you’re over age 50)?

Now look at your 401k. Are you on track for $23,000 of your contributions or $30,500 if you’re over 50? It might be too late to make up for lost time, but you can set yourself up for success in 2025.

Same goes for other accounts. If you have an HSA, max that puppy out. If you have a 529 for your kids and your state has a tax benefit for contributing (my New York does), max it out.

You might not be in a position to max out everything. I totally get it. But if you can, you should.

Time to Rebalance?

If you’re following a time-based rebalancing plan, you’ll likely take action at the end of the year.

How’s your asset allocation look? How far off your target is it? If your allocation falls beyond your predetermined allocation range, it’s time to rebalance.

Don’t be a turkey.

Follow these 5 smart year-end financial planning ideas to ensure your piece of the pie is well cared for.

Thank you for reading! If you enjoyed this article, join 8500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week. You can read past newsletters before signing up.

-Jesse

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Jesse Cramer Writer & Financial Planner

Jesse Cramer is the writer of The Best Interest blog, the voice behind The Best Interest Podcast, and works full-time as a fiduciary financial planner for Cobblestone Capital Advisors in Rochester, NY.