Year-End Personal Finance To-Do List
I’m going to say it. Can you believe it’s almost December?!!!
Tis the season to tidy up your finances to prepare for tax filing, investment accounts, and healthcare policy renewals. Here are a few things to do before the new year rings.
Rebalance your investments. The volatility has surely knocked you allocation off track. This gives you a chance to sell winner, if you have any, and buy losers that could recover at some point. Capturing your losses will help offset any future gains to help with the tax bill.
Now that we’re living in investment turmoil, go back a review your answers to your risk tolerance questionnaire. Do you feel differently about it now that losses impacted your investments? Being in a different mindset is a great way to see if you’re being true to yourself.
With the possible losses in your account, consider a Roth conversion. This will help you save taxes on the growth of those recovering assets. The more tax-free assets you have at retirement, the better.
Do this soon! Some custodians may not have enough bandwidth to process your request before the end of the year.
Max out your contributions to your 401k. If you have a bonus coming, use this as an opportunity to top off your savings in your employers retirement plan.
Review your goals. Has anything changed with you personally that could make you adjust your wishes? This question should always be on your mind.
If eligible, contribute to a Health Savings Account. These account give you triple tax benefits. Deductible contributions, tax-free growth, and tax-free distributions if the money is used to purchase qualified medical expenses.
If you are turning 65 any time soon, make sure you apply for Medicare to avoid lifelong premium penalties. You can apply up to 3 months prior to your 65th birthday.
Complete your required minimum distribution. If you don’t take the necessary amount you will be penalized.
Consider giving to charity to reduce your tax burden. Consider when you will give and what assets will be gifted. Also, keeping detailed records are important to prove the donation if an audit ever occurs.
You can gift up to $16,000 per year, gift-tax free. Make sure you make these gifts before year end. There are also accelerated ways to gift a larger sum of assets.
Check in with yourself. This year was rough for investing and it can take a toll on the emotions. Be open with your financial planner so they can be better for you. Tell them how you feel about the markets, inflation, rising interest rates, a potential recession, war, and how they impacts your plan. The more we know, the better.
These are just a few things to consider while heading into the end of the year. Send me an email if you want to check off a few of these items and see where else you can improve where you stand.
Fiduciary Mission
At Integritas Financial, we are committed to providing fee-only, fiduciary financial planning services that are tailored to the unique needs of young professionals, particularly millennials. Our experienced planners work with you to develop customized financial plans that address key areas such as estate planning, trusts and wills, retirement, workplace benefits, education funding, student debt, and buying a house.
We believe in transparent, client-focused service that puts your financial goals at the center of everything we do. As a fiduciary firm, we are dedicated to acting in your best interests, and we never sell products that charge commissions to clients.
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