As the year draws to a close, it’s the perfect time to take a step back and review your financial picture. A year-end checkup helps ensure you’re on track with your goals, identifies opportunities to reduce taxes, and sets you up for a stronger year ahead. Think of it as an annual “physical” for your finances — a proactive way to keep everything in good shape.
Here are seven important steps to consider before December 31:
1. Review Your Budget and Cash Flow
Start by revisiting your spending and saving habits over the past year.
Assess your budget: Did you stay within your spending targets? Where did you overspend, and where could you save more?
Adjust for next year: Use what you’ve learned to make realistic adjustments for 2025.
Build your emergency fund: Aim for 3–6 months of essential expenses in a readily accessible account if you haven’t already.
2. Maximize Retirement Contributions
Take advantage of tax-advantaged retirement accounts while there’s still time:
401(k) plans: For 2025, you can contribute up to $23,000 ($30,500 if you’re age 50+).
IRAs: You can contribute up to $7,000 ($8,000 if age 50+).
Catch-up contributions: If you’re behind on retirement savings, these extra contributions can help close the gap.
Review your contributions and consider increasing them before year-end to reduce your taxable income and boost long-term savings.
3. Use Flexible Spending Accounts (FSAs) Before They Expire
If you have a health or dependent care FSA, check your balance. Many plans have a “use it or lose it” rule, meaning unused funds may be forfeited after year-end.
Schedule any last-minute medical or dental appointments.
Purchase eligible items like glasses, contacts, or medical supplies.
4. Review Investments and Tax Strategies
Now’s a good time to review your investment portfolio with your advisor.
Rebalance if needed: Market fluctuations can shift your asset allocation over time. Rebalancing helps manage risk.
Harvest tax losses: If you have investments with losses, selling them to offset capital gains may reduce your tax bill.
Consider charitable giving: Donating appreciated securities can provide a tax deduction and avoid capital gains tax.
5. Evaluate Your Tax Withholding and Estimated Payments
Avoid surprises at tax time by making sure you’re on track:
Review your paycheck withholding or estimated tax payments.
If you’ve had a significant income change this year (like a raise, bonus, or side income), you may need to adjust.
A quick check now can prevent underpayment penalties or a large tax bill in April.
6. Revisit Your Insurance Coverage
Life changes — like a new home, marriage, a child, or retirement — may require updates to your insurance.
Review life, disability, health, property, and liability coverage.
Make sure your coverage levels still align with your needs and financial goals.
7. Update Your Estate Plan and Beneficiaries
Finally, take a few minutes to review the “big picture” documents:
Confirm that wills, trusts, and powers of attorney are up to date.
Double-check beneficiaries on retirement accounts and insurance policies — especially if you’ve experienced major life changes.
These small steps can make a big difference in protecting your legacy and ensuring your wishes are followed.
The Bottom Line: A year-end financial checkup is about more than closing the books — it’s about setting the stage for long-term success. By reviewing your spending, savings, taxes, investments, and protections now, you can enter the new year with clarity and confidence.
If you’d like help with any part of this process — from tax strategies to retirement planning — our team is here to guide you. Reach out to schedule a year-end review and start the next year financially strong. Contact us at in**@************rs.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Vertex Partners and LPL Financial do not provide legal advice or tax services. Please consult your legal advisor or tax advisor regarding your specific situation. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.