Year-End Financial Planning Checklist

Year-End Financial Planning Checklist

Year-end checklist

Year-end checklist

The end of the year means different things to different people as they make resolutions and set intentions to improve various aspects of their lives. But there’s one thing everyone should be doing as the calendar begins to head into another January: take stock of their personal finances and take action ahead of the new year. This page will tell you what you need to do before the end of the year to get the most out of your personal finances.

For more help preparing your finances for the end of the year, consider working with a financial advisor to tackle these priorities.

1. Review your financial plan

A lot can happen in a year. Maybe you made a big purchase, got a raise, or went on vacation. This can have a big impact on your financial plan. You should check with your financial adviser if you have one – or find one if you don’t.

2. Rebalance your portfolio

In addition to checking your overall financial plan, you should also review your investment portfolio to see if you could benefit from portfolio rebalancing. This is especially true in 2022 – the market has been extremely volatile and you may need to review your asset allocation. Change money from stocks to bonds or vice versa if necessary.

It’s also a good time to think about whether there are any investments you’re ready to let go of – or whether there’s a new investment you want to consider making.

3. Think about taxes – and harvesting tax losses

Taxes aren’t due until April, but that doesn’t mean you can’t start thinking about your tax bill now. A specific way to deal with taxes right now is tax-loss harvesting. Tax-loss harvesting is a process by which you can reduce your tax bill by selling securities at a loss. It is very important that you follow this process correctly, as there are a lot of rules and regulations that you will need to follow, so it makes sense to work with a financial adviser on this one.

4. Evaluate your charitable giving

Year-end checklist

Year-end checklist

Giving to charity is a good idea for a variety of reasons. First of all, it makes you feel good and it makes others feel good. While these are obviously reason enough to give to charity, the third reason may be what pushes you over the edge – you can get tax relief. Charitable contributions are tax deductible, which means you may end up owing less once you file your claim. However, you must make the deductions by the end of the year to get the deduction on this year’s taxes, so write those checks and submit them before the new year.

5. Consider your debt

The end of the year is also a good time to check your debt. If you received a Christmas bonus, for example, you can use it to pay off a debt, whether it’s an unpaid credit card debt or a student loan that needs to be repaid.

6. Contribute to your retirement plan

You can contribute up to $20,500 to your workplace retirement plan, like a 401(k) in 2022. If you want to maximize your contributions for this year, you’ll need to make sure to make contributions by the end of the year. If you have already maximized your contributions for this year, the maximum contribution will increase to $22,500 in 2023.

You can also make contributions to your Individualized Pension Plan, up to the $6,000 limit for 2022. You do have a little extra time for this, though, because you can spread the contributions for that year up to on tax day.

7. Consider Medicare prices

If you’re old enough to be enrolled in Medicare, you should make sure you’re aware of the price changes happening in 2023. This is where you’ll save some money – the standard monthly premium for Medicare Part B will rise from $170.10 to $164.90 in 2023. Not much of a bargain, but hey, it beats a price hike.

8. Watch your Social Security increase

Social security, on the other hand, is increasing, and in a considerable way. Due to the record inflation of the past year, the increase will be 8.7%. Be sure to take this into account when developing your budget for 2023.

9. Review your estate plan

Year-end checklist

Year-end checklist

The end of the year is also the perfect time to review your estate plan. There might be changes you want to make – if you’ve made money or bought a new house, for example, you’ll want to adjust your will. You should also verify the beneficiaries of all your retirement accounts, especially if you’ve been through a major event like a marriage, divorce, or birth of a child.

The essential

The end of the year is the perfect time to take stock of your personal finances and make the necessary adjustments. From pension catch-up to charitable contributions, you have a little time to get everything in order before 2023.

Financial Planning Tips

  • No matter the time of year, a financial advisor can help you develop and execute a financial plan. Finding a qualified financial advisor doesn’t have to be difficult. SmartAsset’s free tool connects you with up to three financial advisors who serve your area, and you can interview your matching advisors for free to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, start now.

  • If you have access to a 401(k) and haven’t opened an account yet, now might be the time to do so – enrollment is often open towards the end of the year. Be sure to set aside enough to take advantage of any employer matches offered to you.

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The year-end financial planning checklist first appeared on the SmartAsset blog.

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