Year-End Financial Checklist for Smart Money Moves Before 2019

year end financial checklist

With the holidays upon us, many demands compete for our time. It can be hard to sit down and organize our financial lives as the year draws to a close. Indeed, it might appear easier to put off financial planning and review until the New Year.

That being said, there are still money moves you can think about doing before the year ends. After all, life doesn’t take a straight path. People’s needs, goals, and situations change.

Making these moves before year-end can help with managing money-related stress in the upcoming year. Not only that, it can help you get started on the right foot. And if by chance you could meet with a financial professional for your annual review, you could measure progress, see where to improve, and set new goals.

Here are some savvy money moves to consider making before the New Year rolls in, so you can improve your financial wellness, your peace of mind, and your bottom-line.

Year-End Financial Planning Checklist Tips

Here are some tips and guidelines to help you as you plan out your money moves before the year-end.

1. Maximize your contributions to tax-advantaged retirement savings buckets.

Before December 31st rolls in, it’s good to make sure you are taking full advantage of tax-saving for next year. That includes maximizing contributions to tax-advantaged retirement savings accounts and other tax-advantaged buckets.  

If you already contribute to a 401(k) or other workplace retirement savings plan, check to see if you can contribute more. In 2018, the maximum contribution limit for 401(k)s is $18,500. If you are aged 50 or older, you can pay another $6,000 in “catch-up” pre-tax contributions on top of your regular pre-tax contribution amount.

No Employer Retirement Savings Plan?

If you don’t have an employer retirement savings plan, there are other tax-saving methods. A traditional IRA allows pre-tax contributions of up to $5,500 for people under 50 years old. For those 50 and up, the maximum “catch-up” amount is $6,500. Spouses who are homemakers or non-working partners can also contribute to an IRA. However, their spouse must have as much or more than they do but in taxable income.

Maxed Out? Consider Other Tax-Advantaged Buckets

If you have maxed out tax-saving opportunities with retirement accounts, you can use other buckets for tax-advantaged compounding. For instance, fixed annuities generally don’t have a contribution limit like retirement accounts do.

If you will start drawing on other sources beside a salary or business earnings for income in the near future, annuities can help with future income management goals.

2. Replenish your emergency fund. 

Life happens. Everyone faces an emergency or has unexpected costs come up at some point. When those situations do happen, it's good to have an emergency fund to help cover those costs. For working-age households, experts recommend liquid funds that add up to 3-6 months' worth of income needs.

What about People Near Retirement?

More on this later -- among nearly-retired households, an emergency fund of 12-18 months' worth of income needs is a goal to aim for. Why so high? Because emergencies relating to health or aging may arise, and these situations may require out-of-pocket expenses. 

What about People Who are Retired?

Individuals and couples who are already retired have a different situation. They will have a variety of sources already paying income, such as Social Security. While income-paying sources can offer some emergency cost relief, it's still good to have financial buffer.

According to the Rule of 100, a emergency fund could be 10% of a retirement portfolio, with the emergency stockpile being in liquid funds. Otherwise it's helpful to aim for 6-9 months' worth of income needs as an emergency stockpile goal.

3. Review your retirement plan, your income strategy, and your investments.

A lot can change in a year. Did the market see drastic changes? Were the "safe" or fixed-income portions of your portfolio impacted with gradual interest rates changes? Has your situation changed where income needs have evolved? Has it been awhile since you revisited your asset allocation strategy, and where a look-over makes sense? These are all questions to consider as you review your finances.

How you evaluate the performance of your portfolio will depend on your individual goals. That is outside the scope of this article. But that being said, going over your financial picture with a qualified financial professional can help you ask the right questions, answer them, and make adjustments. 

If you don't have a retirement plan in place, now is a good time to start. The sooner, the better. People with a retirement financial plan report better outcomes, from improved retirement savings to greater peace of mind and overall wellness. 

Already Retired? See if Your Plan Needs Adjustments

Just like undergoing annual medical checkups, your current plan should be reviewed annually throughout your retirement years. Your financial professional may help you in a number of ways. They can identify new strategies to alleviate your tax burden, increase your retirement income on a tax-efficient basis, or generally make your money work more efficiently. 

If you are married and don't have a plan in place for the question of survivorship, it's good to start now. Find out what you can do to ensure an efficient financial transition for the surviving partner should something happen to one of you.

You will want to consider the potential effects of aging in your plan. That includes preparing for costly healthcare and long-term care needs. Be sure your plans also strategize for declining cognitive abilities and a diminished capacity to make sufficient financial decisions.

4. Go over your household budget needs and next-year estimates. 

Take a tally of what your spending picture looks like month-to-month. Not only can this help you see what your spending patterns are like throughout the year. It will also help you with creating an income snapshot for determining future retirement income needs.

Efficient budgeting will help you separate "essentials" from "nice-to-haves." If you need to ramp up savings for your future income goals, look out for areas where you can "unlock" spending. Then you can allocate those freed-up monies toward your saving goals. 

5. Consider potential changes to your tax bill.

Changes in marital status, number of dependents, and household income will impact your tax obligation. Should you earn income as a worker, think about checking to make sure you are withholding enough money. The IRS offers a withholding calculator you can use for estimations.

Under current tax law, a number of things may qualify as deductions and help mitigate your tax burden. Ask your tax planning professional for guidance. If any life changes have happened, you may want to discuss them with your tax advisor for additional opportunities.

Social Security and Taxes

If you haven't claimed Social Security yet, check on what your benefits may mean for future taxable income. Depending on a number of factors, as much as 50-85% of your benefits may be taxable. Our article on Social Security taxes in retirement discusses more information. However, there are some strategies that can give you income and don't count towards your benefits being taxable. 

Should your Social Security claiming decision happen to coincide with plans to work longer, be aware that may impact your future benefits. Ask your financial professional for more information for your situation and goals.

6. Review your required minimum distributions. 

If you have reached 70.5, required minimum distributions kick in. Did you turn 70.5 this year and decide to delay taking your RMD? Then you have until April 1, 2019 to take it. Otherwise you may incur a potential 50% excise tax penalty. 

Younger individuals who have inherited an IRA from a loved one may have RMD rules to satisfy, too. Check with your tax advisor for more details.

7. Revisit your estate goals and any charitable giving opportunities. 

Many people have estate or legacy wealth goals. If you haven't started planning for those, now may be a good time to start talking with estate planning professionals. Your financial professional can help you identify solutions for effective, tax-efficient legacy transfers to loved ones.

Review all of your retirement accounts, annuities, life insurance policies, and other assets for your beneficiary designations. Do your designations reflect your estate goals? Make sure they are updated if they need to be.

Gifts of cash or other assets can help you with your tax obligations. Ask your financial and tax professionals for ways you can give to causes you support and benefit accordingly.

8. Check up on your life insurance coverage. 

Life insurance is important for those with families or dependents. Yet many Americans don't buy life insurance or have what they need. The unexpected can come at any point. So now is a good time to revisit your coverage and see if you are well covered.

For those nearing retirement, different life policies may come with "living benefits," or riders that help you pay for costly care expenses. If you are looking for ways to enjoy tax-efficient retirement income or to finance "nice-to-have" purchases, take note. There may be certain strategies with life insurance you can use.

A knowledgeable life insurance expert can walk you through these options. If you are shopping around for life insurance, they can help you find a policy that's right for you.

9. If you have kids and plan for college, evaluate college saving goals. 

Because of rapidly rising educational costs, many families make college funding a part of their overall savings goals. It's prudent to evaluate your progress within your college saving vehicles. 

If you haven't started this yet, but plan on giving this support, you may have a variety of options. Vehicles like 529 plans can help you accumulate funds in a tax-advantaged manner. Should you worry about how your future asset make-up could affect your children's financial aid, vehicles such as cash value life insurance can help you build up wealth and also assist you with making the most of those opportunities. 

Ask your financial professional for guidance on what strategies may be best for you.

10. Begin preparing for next year. 

Every year is different. Now is a good time to start thinking about the New Year, along with what your goals will be. Schedule a follow-up appointment with your financial professional to strategize.

As the New Year rolls in, you may find that the goals and needs you identified now have changed. Proactive planning and adjustments can help you put your best foot forward.

Need Help Planning for Your New Year?

Do you need personal guidance in creating a financial roadmap for the upcoming year? If so, meeting with a qualified financial professional can help with your short-term and long-term aims. When you are ready, financial professionals at can help you.

Use our "Find a Financial Professional" section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723. 

Disclaimer: does not provide investment, tax, or legal advice. Please confer with qualified professionals in these areas for guidance with your personal situation and decisions.

Author: Ian

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