5 Smart Year-End Financial Planning Strategies


Getting your finances in order for the end of the year takes a significant amount of time, which is why it’s always wise to gear up your financial to-do list. Since most year-end planning avenues come with strict deadlines, it’s never too early to start. Making the most of your financial and tax planning before it’s too late is very important. While you’re better off planning your finances throughout the year, we all know that’s easier said than done. So if you’re one amongst the many who’ve put it off until the end of year, here are some strategies that can help you accelerate the process. 

Quick Actionable Financial Planning Strategies for the End of the Year
  • Maximize Your Retirement Plan Contributions. You’re allowed to contribute a certain amount to your Traditional or Roth IRA each year. The IRA contribution limit is $6000 up to 50 years of age. If you’re older, you can contribute up to $7000. In addition to this, also consider putting your bonuses into your retirement plan. While the amount may not seem like much at present, with a growth rate of 5%, in 30 years you will have a significant amount of money. Contributing this amount could change your retirement lifestyle to a large extent. So make sure you maximize your contributions towards your retirement plan.
  • Tax Harvesting. This refers to selling investments in order to balance out your tax liability. If you have a mixed portfolio with different investments, you’ll likely have some gains and some losses. But these gains and losses are realized only when the investment is sold. When you realize your gains, you have to pay a capital gains tax. But if you have losses in your accounts, you can sell them by the end of the year and apply these losses against your gains to minimize the tax liability.
  • Review & Update Beneficiaries. Never forget to plan for uncertainties in life. Marriage, divorce, having children, etc. are all events that may cause you to change your mind about your beneficiaries. So always make sure you review and update beneficiaries on your IRA, 401(k), insurance policies, and estate plan by year end.
  • Make Charitable Contributions. Nothing compares to the feeling of contributing towards a good cause. Also, donating to charity gives you tax benefits. However, this is applicable only when you donate through a donor-advised fund or to a recognized charity. Make charitable contributions before the end of the year to benefit from tax deductions.   
  • Contribute to a Health Savings Account. You may qualify for a Health Savings Account (HSA) if you have a High-Deductible Health Plan. This account not only offers a great way to save but also comes with the best triple tax advantage. All your contributions to an HSA are tax-deductible, and so this reduces the taxes you owe. Secondly, the assets in your HSA account grow tax-free. Moreover, the funds you withdraw from this account are also tax-free provided they are used for qualified medical purposes.

The best time to start year-end planning is in October. But as mentioned earlier, it’s never too early because some strategies may take longer to implement than others. Don’t worry if you started late this year. Start planning right away from the financial and tax perspective for next year. Remember, planning ahead is key!