End the year strong: Financial moves to consider making right now

Allworth financial advisor Jeremy Murray, CFP®, AIF®, CRPS®, explores actionable financial steps to take in December, helping clients maximize their savings, reduce taxes, and enter the new year with confidence.

 

With just a few weeks remaining in 2024, there’s still time to take a closer look at your finances. Whether you’re already retired or preparing for it, this time of year offers unique opportunities to ensure you’re set up for success as the calendar turns to 2025.

Here are some practical financial moves to consider before year-end:

1. Max Out Your Retirement Contributions

As the year wraps up, it’s important to ensure you’re maximizing contributions to your retirement accounts. For 401(k) plans, the deadline to contribute for the 2024 tax year is December 31, so now is the time to make any final adjustments. For this year:

• 401(k): The contribution limit is $23,000 (or $30,500 if you’re age 50 or older).

If you’re contributing to an IRA, you have a little more time. The deadline for IRA contributions for the 2024 tax year isn’t until April 15, 2025. This gives you the flexibility to contribute up to:

• Traditional or Roth IRA: $7,000 (or $8,000 if you’re age 50 or older).

For retirees, now’s the time to double-check that you’ve taken your Required Minimum Distributions (RMDs) if you’re age 73 or older. Missing an RMD could result in a penalty of up to 25% of the amount you were supposed to withdraw. If you’re unsure, confirm with your advisor to ensure your accounts are in order.

2. Use Tax-Loss or Tax-Gain Harvesting to Your Advantage

The end of the year is a great time to review your taxable investment accounts and see if you can benefit from tax-loss harvesting or tax-gain harvesting. Both strategies can help optimize your taxes based on your financial situation:

• Tax-Loss Harvesting: If you’ve sold investments at a loss this year, those losses can be used to offset capital gains. For example, if you have a $5,000 gain on one investment but a $3,000 loss on another, you can subtract the loss from the gain and only pay taxes on the $2,000 difference.
  • If your losses exceed your gains, you can use up to $3,000 of those losses to reduce your ordinary income. Any remaining losses can be carried forward to future tax years.

• Tax-Gain Harvesting: On the other hand, if you’re in a lower tax bracket this year, you might consider selling investments with gains to "harvest" those gains at a lower capital gains tax rate. This can be particularly effective if you’re in the 0% long-term capital gains tax bracket, allowing you to realize the gain without paying taxes.

3. Consider Charitable Contributions

December is a time of giving—and not just in spirit. Making a charitable contribution before December 31 can reduce your taxable income for 2024. If you’re over 70½, you might consider a Qualified Charitable Distribution (QCD) from your IRA. This allows you to donate up to $100,000 directly to a charity, satisfying your RMD while avoiding taxable income.

Alternatively, gifting appreciated assets like stocks or mutual funds can help you avoid capital gains taxes while still benefiting a cause you care about. It’s a win-win for you and the organization.

4. Review Your Estate Plan and Beneficiaries

As life changes, your estate plan and beneficiary designations should reflect those updates. December is a great time to:

• Ensure your will and trusts align with your current wishes.
• Confirm beneficiaries are up to date for retirement accounts, life insurance, and other financial accounts.
• Simplify account structures where possible to make things easier for loved ones in the future.

A quick review now can provide peace of mind heading into the new year.

5. Use Flexible Spending Account (FSA) Funds

If you have a health-related Flexible Spending Account (FSA), check if you have a “use-it-or-lose-it” balance. Some plans allow a carryover of a small amount, but many require funds to be spent by December 31. Eligible expenses may include:

• Prescription glasses or contact lenses.
• Medical devices or treatments.
• Co-pays or other qualified healthcare costs.

Don’t let those hard-earned dollars go to waste—plan to use them before they expire.

6. Plan Ahead for 2025

While reviewing your 2024 finances, take time to set intentions for the coming year. Ask yourself:

• Are my financial goals still aligned with my lifestyle and needs?
• Do I need to adjust my savings strategy or spending habits?
• Are there opportunities for tax optimization, such as Roth conversions or updating my estate plan?

Taking small steps now can make January feel less overwhelming and set you up for a strong start to 2025.

Final Thoughts: Closing the Year with Confidence

December may feel like a whirlwind, but carving out time to review your finances is worth the effort. A few smart moves now can help you finish 2024 strong and enter the new year feeling confident and in control.

If you have questions or want to discuss any of these ideas, feel free to reach out—I’m here to help you make the most of this year and plan for the next.

Jeremy Murray, CFP®, AIF®, CRPS®

Partner Advisor

As a self-proclaimed “numbers guy”, I truly enjoy helping people make sense of something that can feel complicated and overwhelming. Most people don’t grow up learning financial literacy and wealth management. Yet, getting your finances in order is critical as you prepare to transition to retirement—a phase in life where you’ll be entirely financially independent.

 I believe money is a tool that can be leveraged to provide the freedom you what. And I always strive to meet clients where they are in life, focus on educating them about their choices, and work to build a plan that’s achievable, comforting, and aligned with their goals.

LEARN HOW I CAN HELP >>