The Essential Year-End Financial Planning Checklist

By: Scott Sturgeon, JD, MBA, CFP®

Would you like to receive more content just like this directly to your inbox? Click here to subscribe!

Your 11-Point Year-End Financial Planning Checklist
As the year comes to a close, it’s not uncommon for a lot of people to start focusing on the holidays and getting ready to wrap things up for the year. As part of that process though, it’s crucial to engage in proactive financial planning to ensure that your finances are aligned with your goals and to try to minimize your tax liabilities. The choices you make in the next couple months can significantly impact your financial well-being in the coming year.

In this quick list, we’ll highlight 11 key year-end financial planning considerations that can help you achieve your financial goals.

1. Review Your Investment Portfolio: The end of the year is an ideal time to review your investment portfolio. Assess your asset allocation, risk tolerance, and investment objectives. Consider rebalancing your portfolio to maintain your desired risk-return profile. This is also an opportunity to harvest tax losses, which can offset capital gains and reduce your tax liability.

2. Maximize Retirement Contributions: Contributions to retirement accounts such as 401(k)s, IRAs, and SEP-IRAs can provide significant tax benefits. Consider maximizing your contributions to take full advantage of tax-deferred or tax-deductible retirement savings. For 2023, the annual contribution limit for a 401(k) is $22,500 (or $30,000 for individuals over 50). If you’re in a high income tax bracket, those contributions can potentially save you some serious money when it comes time to pay your taxes!

3. Evaluate Your Tax Strategy: Work closely with a tax professional to identify potential tax deductions and credits you may be eligible for. Implementing strategic tax planning can help reduce your overall tax burden. This includes examining your deductions, tax credits, and potential changes in tax laws. If you haven’t caught on already, tax planning and tax strategy should be huge considerations for any year-end financial planning!

4. Charitable Giving: Consider charitable giving as part of your year-end financial planning. Donating to charitable organizations can not only support causes you’re passionate about but also provide you with valuable tax deductions. Donor-Advised Funds (DAFs) can be a great tool for managing your charitable giving while maximizing your tax benefits.

5. Estate Planning: High-income earners should revisit their estate plans regularly, which often means about every 5 years or in the event there’s a significant life change. Ensure your wills, trusts, and beneficiaries are up to date and aligned with your current goals. Proper estate planning can help protect your wealth and ensure a smooth transition to your heirs.

6. Evaluate Debt Management: Review your outstanding loans and mortgages. Debt management can help free up cash flow and reduce overall interest expenses. If you’ve taken on debt in the last 12 months, there’s a decent chance the interest rate on that loan is considerably higher than it may have been a couple of years ago. Once you start to get above 8% on consumer debt (credit cards, auto or personal loans, etc.) it starts to make more sense to aggressively pay that down rather than even invest those funds.

7. Health Savings Accounts (HSAs): Maximize contributions to these accounts if you have them. HSAs offer triple tax benefits – tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. They’re arguably one of the most tax-efficient saving and investing accounts out there and well worth utilizing if you’re enrolled in a high deductible health insurance plan.

8. Business Owners: For business owners, consult with your wealth advisor or accountant regarding deductions and tax credits available for business expenses. You might consider equipment purchases, employee benefits, and other strategies to reduce your business tax liability. For example, for business owners that also own real estate, having a cost segregation study done on your property could potentially expedite depreciation on certain components of that property, which in turn can save taxes near-term.

9. Tax-Efficient Investing: Explore strategies to minimize your tax liability through tax-efficient investing, including capital gain and dividend tax management. If you have assets in a taxable account you’re currently holding at a loss, consider selling them and reinvesting the proceeds in something that provides you similar exposure to the market (i.e. tax loss harvesting). Conversely, if you know you’re going to have a lower income year in 2024, consider holding off on selling assets to potentially take advantage of being a lower tax bracket.

10. Tax Breaks for Education: Depending on the age of your child (or grandchild), there are a myriad of options available to potentially provide you both tax breaks for 2023, but to also help cover educational costs for family members. If you have little kids & have incurred costs for childcare, day camps, or other similar expenses, consider checking whether you’re able to fund a Dependent Care FSA through work. It’s basically a tax deductible checking account you can reimburse yourself from for those expenses throughout the year. For older kids or grandkids, contributions to a 529 College Savings Account are tax deductible up to certain amounts in many states & the funds can grow tax free over time to pay for a variety of educational expenses like college books & tuition, but even some high school expenses as well.

11. Seek Professional Guidance: If any of the above jump out at you as being something that might be beneficial for your personal financial situation, consider reaching out to us at info@oreadwealth.com or scheduling time by clicking here. We can help provide transparency into your overall financial situation and offer guidance on how to align your finances with what’s important in your life!

By addressing these year-end financial planning considerations, you can work towards achieving your financial goals and maximizing your wealth while minimizing tax liabilities. Take the time to review your financial situation and make any necessary adjustments now, so you can start the new year with a well-defined financial strategy.

So which of these strategies might make sense for your specific financial situation?

Let’s talk.

Schedule Time Here

Subscribe To Our Newsletter Here

Still curious to learn more? Check out our recent edition of our newsletter, Views From the Top, for more estate planning insights!