Rupa Pereira


By Rupa Pereira

The holiday season is marked with a festive atmosphere, travel plans, shopping lists and sales to lure you to the nearest retailer, if you’re not already scouring online deals.

It’s also a great time to look back on the year that has been. A lot of life happens in a year, and families need to assess their financial health relative to their goals. It presents an opportunity to capitalize on year-end financial opportunities, such as maximizing retirement contributions, taking advantage of tax benefits, or making charitable donations for tax deductions. Here’s a checklist that could help with putting financial matters in perspective.

Income and Expenses:

Reviewing income, expenses, savings, investments, and debts helps in understanding where money was allocated and if it aligned with financial goals.

Track and categorize all income and expenses for the year. Financial tools such as YNAB, Mint, Empower and Monarch are a few of the popular ones.

Identify areas where expenses can be reduced or optimized – Did you have unplanned expenses or a new recurring subscription? Account for those in the upcoming budget for the new year, so it doesn’t catch you off-guard again.

Tax preparation

It’s a great time to gather necessary documents and make strategic moves before the tax deadline. Your withholdings on your paycheck will be worth revising if you’ve had a change in family status or family size. Those with small businesses or sole proprietors, consider making the last estimated tax payment to avoid being hit with a penalty.

Retirement Plan – Employer and Individual:

If you have an employer retirement plan at work, be sure to review how much money you contributed to the plan this year. If you have a 401(k), you may be able to put $22,500 before any company match or $30,000 if you are 50 or older. Make sure you are maxing out your 401(k) if you are financially able to do so. Looking ahead to next year review your investment portfolio, and decide if it’s sensible to utilize your Traditional or Roth 401(k) option (if available).

Be mindful that for 2024, the 401(k)/Roth and 403(b) contribution limit increased to $23,000. Catch-up contributions will remain at $7,500, so those 50 and over can put away up to $30,500. Be sure to make the required tweaks within your plan to ensure you are making the maximum contribution next year. Funding Individual Retirement Accounts (IRAs) – both Traditional and ROTH – can be done till April of the following year so you still have time for those. The limit for 2023 is $6500 with a catchup of $1000 for those 50 and over. The limit for 2024 is $7000 with the same catchup of $1000 for those 50 and over. Do you have old retirement accounts still held at a previous employer? If appropriate, now may be a great time to get them consolidated to an IRA to keep your assets organized.

Estate Planning:

Did a family member who was a beneficiary on your account pass this year? Did you want to change beneficiaries because your family dynamics have changed? Be sure to reach out to your financial professional to update them on your situation. You may also want to reach out to your estate planning attorney to review and update your planning/documents such as a will, Power of Attorney, Health Care Proxy, and other estate planning documents.

Education Planning:

Evaluate progress on education savings goals for children. Update 529 plans and other education savings accounts. You can fund up to $17,000 per child in 2023 without affecting your overall gift-tax exclusion limit.

Year-end Investment Moves: 

Two important investment moves to consider are your overall portfolio allocation and rebalancing. In terms of your asset allocation, review your investment mix of stocks, bonds, alternative investments, and cash to determine if it still makes sense for your objectives and time horizon.

Health and Wellness:

Assess health insurance coverage and make any necessary changes. Schedule necessary health check-ups and screenings, especially if you’ve exceeded your deductible and your insurance coverage resets at the beginning of the year. Review health-related expenses and plan for any upcoming medical needs. Flexible Spending Accounts (FSA) accounts are use-it-or-lose-it. If you’ve contributed all year but have yet to get reimbursed for qualifying expenses, now’s the time to do so.

Charitable Giving:

Assess charitable contributions made during the year and if you’re feeling philanthropic, now’s a good time to open your wallets and be generous.

Consider making year-end charitable donations for tax purposes especially if you’re planning to itemize your deductions vs. taking the standard deductions.

Ensure proper documentation for tax-deductible donations as cash contributions over $250 need to be substantiated with receipts.

In summary:

Reflect on the progress made toward financial goals set at the beginning of the year. Assessing progress against the set goals allows for adjustments to align with changing priorities or life circumstances.

Celebrate achievements with family and loved ones and learn from any setbacks. You’ve made it this far!

Rupa Pereira is the owner and lead financial advisor at FWJ Planning, an investment advisory and planning firm registered in NC. As an enrolled agent, she’s also authorized by IRS to represent her clients on tax-matters. Contact: [email protected].