1. Maximize your retirement savings
Review and contribute the maximum to your retirement accounts. Ensure you’re taking full advantage of 401(k) limits and any employer match available. It’s a foundational step in strengthening your retirement savings.
2. Consider a Roth conversion
Evaluate whether converting a traditional IRA to a Roth IRA suits your financial situation. Consult with a financial advisor or accountant to understand the tax implications and process before the year ends.
3. Optimize Health Savings Accounts (HSA)
If you have an HSA, contribute the maximum allowable amount. Consider investing any excess to take advantage of the triple tax benefit.
4. Use Flexible Spending Accounts (FSA) wisely
FSAs are often “use it or lose it.” Ensure you’ve utilized all funds for eligible healthcare expenses before they expire at year-end.
5. Manage required minimum distributions (RMDs)
If you’re of age, ensure you’re taking the required minimum distributions from retirement accounts to avoid penalties. Consider reinvesting these funds if they’re not needed for immediate expenses.
6. Conduct tax planning and review payments
End-of-year is crucial for tax planning. Review your estimated tax payments and strategize for the upcoming year to optimize your tax position.
7. Track and plan charitable contributions
Record your charitable contributions for tax deductions. Consider strategies like charging contributions to pay later or transferring stocks to a Donor Advised Fund to maximize your tax benefits.
8. Adjust savings and investment strategies
Increase your savings and investment deferrals even by a small percentage. Over time, these incremental increases can significantly impact your financial growth due to compounding.
9. Review your financial plan and goals
Take stock of your current financial situation, budget, and goals. Ensure your investments, insurance, and overall financial plan align with your short-term needs and long-term ambitions.
10. Budget review and adjustments
Examine your spending habits from the past year and identify any areas for cost savings. Adjust your budget to cut unnecessary expenses and realign with your financial goals for the coming year.
Conclusion and action steps
As you approach year-end, dedicating time to financial planning can significantly impact your future comfort and security. If you’re looking for expert guidance to navigate these financial strategies or tailor them to your unique situation, consider reaching out to a Signet advisor. Our team is ready to help you optimize your financial planning and ensure you’re set for success in the new year and beyond.