5 money moves to make before year’s end

As the year draws to a close, it’s common to shift into reflection mode — looking back at the goals that were set, taking stock of achievements, and clearing out what no longer serves. It’s also a time to set your sights on new goals for the year ahead. And often, finances are at the center of all that reflection and planning, and for good reason. Only 30% of working adults rate their financial health as excellent or very good, which means the majority feel there’s plenty of room for improvement.¹ And while many Americans want to build wealth, fewer than 1 in 3  feel confident in their ability to create an investment plan to get there.² What’s more, just 40% turn to a financial professional for help.³ That gap in confidence and support can make it harder to grow wealth or to weather an unexpected financial storm.

You don’t have to have it all figured out to take meaningful steps toward greater financial confidence. Here's where the tendency toward end-of-year reflection can help. Now may be an ideal time to take stock of where you stand and make a few smart moves that can set you up for a stronger financial future. This checklist can help you see what’s working, where you might need to make adjustments, and how to align your financial habits with your long-term goals. By carving out a little time now, you can enter the new year more organized, prepared, and confident about your financial path forward.

1. Review protection policies 

Protecting yourself, your family, and your business from life’s uncertainties is critical. Even if you have a solid retirement strategy, without the proper coverage you and your family may struggle to recover from unforeseen events like being subject to a lawsuit, becoming sick or injured, or an unexpected death. That’s why it’s essential to review your insurance policies, beneficiary designations, and estate planning arrangements, and update them as needed.

2. Put a tax-saving strategy in place

Time is of the essence when addressing tax-efficient strategies. Your year-end strategy may include additional contributions to tax-deferred vehicles, such as 401(k)s, IRAs, HSAs, and 529s. Contributing more to these assets now can reduce your taxable income — and thus what you owe the IRS — at the end of the year. A financial professional can go over your unique financial situation, analyze the tax-efficient strategies available, and help you make the money moves that are best for you.

The end of the year can also be a good time to convert an IRA to a Roth IRA. Although this strategy, commonly called a Roth conversion, means you’ll incur more taxes this year, it can enable you to increase your tax-free income during retirement. You might also consider a partial Roth conversion, where you convert a portion of your IRA assets to a Roth IRA one year and convert the remainder of your IRA assets the next year. Spreading your conversion out over a couple of years means you’ll also spread the tax hit out over the same period.

3. Review your investments

The close of the year is the perfect time to give your portfolio a checkup. Did you get a raise this year? If so, you might think about putting that extra income toward an investment and/or boosting your retirement savings. Big life changes like getting married, welcoming a child, or stepping into a caregiving role are also good reasons to revisit your financial plan and make sure your investments and retirement contributions still align with your long-term goals. And while you’re at it, take a look at your allocations to see if your current risk level still feels right or if it’s time for an adjustment.

Another strategy worth considering is tax loss harvesting. This involves selling securities at a loss to offset a capital gains tax liability. These losses can be used to help offset up to $3,000 of your ordinary income.⁴ That said, tax loss harvesting isn’t for everyone and should be approached in consultation with a tax professional.

4. Revisit your budget

Reviewing your financial plan can feel daunting but doing it at least once a year is a smart move.⁵ And what better time than the holiday season, when you’re already reflecting and setting goals for the future? Taking a good look at your cash flow and budget now can set you up to save and invest more in the coming year. Remember, investing is a long game. Anytime you can put more toward your goals, you’re strengthening your foundation and giving yourself a better chance of weathering market ups and downs.

5. Personal aspirations and/or business strategies 

The end of the year is a great time to work on goals and strategies for the upcoming year. It’s important to know now what you want to accomplish for yourself or for your business and to put a plan in place to achieve it. Working with a financial professional who listens to you, communicates effectively, and is knowledgeable and trustworthy can make all the difference. He or she can help you take concrete steps toward meeting your goals — 85% of people who work with a financial professional say they are on track to meet their financial goals.⁶

No matter where you are in your financial journey, a little reflection and thoughtful action now can help set the stage for a brighter, more confident year ahead.