7 year-end financial planning moves you don’t want to miss

2018 is closing in fast. Now that the year is almost over, it’s a good time to wrap up any loose money ends and prepare for the coming year. With the right positioning, you can reduce your tax liability for this year, identify problem areas, and improve your situation heading into the new year. Here are 7 financial planning moves you should make before the end of the year:

  1. Use Your FSA Money

If you have a flexible spending account (FSA), now is the time to use the money. While a limited amount of the money might roll over, by and large, these accounts are use-it-or-lose-it. Review your health care needs, and use your FSA to pay for doctor visits or for special procedures. This is also a good time to have dental work done, or get new glasses. Double-check qualified spending, and make plans to use the money.

  1. Boost Your Retirement Contributions

Do you still have room to make retirement contributions? If you haven’t maxed out your contributions, now is a good time to do so. You’ll get a tax deduction for contributions to Traditional 401(k), 403(b), and IRA accounts, and enjoy tax-advantaged growth from the money. It’s a way to benefit now and in the future.

If you are a business owner, now is a good time to open a retirement account if you don’t have one. You can open a SEP IRA or some other account aimed at the self-employed and enjoy a tax benefit while saving for your future.

  1. Donate to Charity

Now is also a good time to donate to charity.  Your tax-deductible contribution can reduce your liability come April. This is also a good time to donate goods. Clean out the attic and the backroom. Any items still in good condition can be donated and you can receive a tax deduction for their current market value. Make sure you get a receipt and keep good records of the items you donate.

With the tax changes before congress, consider if a donor advised fund makes sense for your situation. You can read more about Donor Funds here and also see our email commentary on year end tax planning here.

  1. Review Life Changes and Make Adjustments

If you’ve had a major life change this year, review which items require adjustments to your financial plan. A marriage or divorce affects your tax filing status. You might need to change your insurance plan due to your growing family. Open enrollment is still going on in many cases, so make sure your health plan is up to snuff.

You should also check your beneficiaries to ensure that they are updated. Life insurance and retirement plans pay out to the listed beneficiary, not the person you designate in your will. You might need to change your beneficiary designations.

  1. Update Your Estate Plan

The end of the year is a good time to review and update your estate plan. Make sure that you make adequate allowance for your heirs, and that you have your assets properly protected. A review of your estate plan can help you determine if it’s time to use trusts to help with your estate, or if you need to make other tweaks.

  1. Tax-Loss Harvesting

This is also a good time to use tax-loss harvesting to your advantage. If you have some investments that no longer fit with your portfolio, and they have losses, now is a good time to sell. You can use capital losses to offset capital gains during the year, and even offset some of your earned income.

While you’re at it, this is also a good time to re-balance your retirement portfolio. If you’ve got multiple accounts at various custodians and old employers, you’ve got some leg work to do!

  1. Meet with a Financial Professional

Finally, year-end is a good time to meet with your financial planner. Go over the past year to identify ways you can improve your situation, and then look ahead. An outside view of your finances can help you assess the situation a little more clearly, and a professional can provide you with expert advice moving forward.

Wrap up those loose money ends and prepare to make the coming year great!

investing for retirement ebook ipad - McClain Lovejoy
investing for retirement ebook ipad - McClain Lovejoy
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