Top 6 Year-End Financial Strategies: Secure Your Future by Dec. 31!

As we close in on the end of 2024, it’s the perfect moment to take stock of your financial landscape and make those crucial moves before the year slips away.

The good news? We’ve tapped into the wisdom of financial planners who spend these final weeks crafting strategies that can set you up for success.

Last year, we gathered insights from a panel of experts, and based on their feedback, we compiled a list of six pivotal financial steps to consider before December 31st. Given the positive response from our readers, we reached out to our original experts, plus a few new faces, to see if their strategies had changed. Spoiler alert: they haven’t!

Here’s their essential advice, which includes enhancing your retirement savings, fine-tuning your insurance coverage, and exploring smart tax shelter options.

If you have investment accounts or life insurance, naming beneficiaries is key. These individuals will receive your assets when you’re no longer here, and for many, these designations are essentially an estate plan in themselves. They’re legally binding and determine the fate of a significant portion of your wealth.

But life changes—births, deaths, or family drama—can complicate things. That’s why taking stock at year’s end is so vital.

“Make sure your beneficiaries are current on your investment accounts,” advises a seasoned financial planner.

“It might not be on everyone’s radar, but with the holidays around the corner and loved ones gathered, it’s the perfect time to reflect on how you want to protect your family and ensure they benefit from your hard-earned money if the unexpected happens.”

Also, now’s a great time to evaluate your overall estate plan, powers of attorney, and insurance coverage, suggests another financial expert.

“Do you have life insurance, long-term disability insurance, and long-term care insurance?” If not, it might be time to explore these options. Long-term care insurance is often overlooked, yet it can be a lifesaver in covering assisted living or nursing home costs.

Keep in mind that if one spouse has coverage through work, it doesn’t automatically extend to the other spouse.

Don’t forget to schedule a meeting with an estate planning attorney to create or update your will, healthcare directives, and other essential legal documents if you haven’t done so recently.

The holiday spirit often inspires generosity, and the IRS allows you to deduct cash donations to qualified charities—potentially up to 60% of your income!

Just remember, donations only qualify for tax deductions if they’re made to approved charities, and documentation is essential for larger gifts.

To maximize the benefits of charitable giving as a tax shelter, you’ll need to itemize your deductions rather than opting for the standard deduction when tax season rolls around.

“If you want the deduction for 2024, make sure your charitable gifts are made before the year ends,” one expert emphasizes.

The festive season also presents a fantastic opportunity to gift money to your loved ones. You can give up to $18,000 per recipient in 2024 without needing to file a gift tax return.

The gift tax applies to transfers of money or property to someone who doesn’t give you something of equal value in return. If your gifts exceed the annual limit, you’ll have to report it to the IRS.

As December rolls in, it’s also a prime time to ensure you’ve maximized your retirement planning contributions.

Tax-advantaged retirement accounts are your ticket to saving a portion of your income before taxes come into play.

However, limits apply. For Individual Retirement Accounts (IRAs), the annual contribution cap is set at $7,000, or $8,000 if you’re 50 or older.

For those with employer-sponsored 401(k) plans, the max contribution is even higher, reaching $23,000, or $30,500 for individuals over 50.

“Now is the time to take action and max out your 401(k),” stresses a financial advisor. “Most contributions flow through your employer’s payroll system, so make any necessary adjustments before the final paychecks of the year are distributed.”

With contribution limits set to increase in 2025, updating your payroll deductions and IRA contributions is crucial to optimize your savings as the new caps take effect.

A required minimum distribution (RMD) kicks in when you turn 73. This means you must withdraw a specified amount from your IRA or 401(k) by December 31.

“If you haven’t already taken care of that, make sure to complete your RMD by year-end,” advises another expert.

In exchange for the tax breaks, the IRS mandates that you begin withdrawing from your retirement accounts at a certain age. The RMD process ensures that the IRS gets its cut from your retirement savings.

Consulting a financial advisor can help you determine how much you need to withdraw by the end of the year, or you can refer to an RMD table. Failing to meet your withdrawal obligation may result in a hefty 25% excise tax on the amount you didn’t cash out.

As the year winds down, it’s also an optimal time to engage in a tax strategy known as tax-loss harvesting.

This investment strategy turns losses into tax advantages by selling underperforming investments and using those losses to offset gains from successful investments.

“If you have any losses, now’s the time to harvest those tax benefits,” advises a financial planner.

So, get started on this checklist and see how many items you can cross off before ringing in the New Year!