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October 2nd, 2024

Take Care Of Your Year-End Financial “To-Dos”

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Diana S. from Memphis, TN asks: Hello Mitch, I can’t believe this year is almost over! As we get into the holiday season, I usually get busy and don’t have much time for planning, investing, etc. Do you have a short list of “to-dos” you can share that I should try to get done sooner than later? Thank you!

Mitch’s Response:

Thanks for writing, Diana. Making sure your ‘financial house’ is in order before the holiday season is a great idea.

I have several ideas I can share with you. The first one is to be sure you’ve reached all of your savings goals for 2024, which may mean checking how much you’ve contributed to retirement accounts and whether you have more room to max out. Generally speaking, you have until April 15, 2025 to make retirement account contributions for 2024, but I think it’s best to try to max out this year if possible. If you’re retired, perhaps this just means creating a budget for the last three months of the year, to ensure your spending and saving for the full calendar year is where you want it to be.1

This next tip may not apply to you given your age, but readers should note that the required minimum distribution (RMD) age has risen to 73. If this is your first RMD year, you can wait until April 1, 2025 to take the distribution, but just like my advice above, I wouldn’t wait unless you have a specific tax reason for doing so.

Is Your Retirement Portfolio Protected Against Life’s Unknowns?

Unclear investment goals can lead to uncertainty and nervousness, but it’s important not to let fear of the unknown prevent you from taking advantage of future opportunities.

I’m offering all readers to download our free guide, How Solid Is Your Retirement Strategy?2 for key strategies to help protect your financial security in retirement, including:

If you have $500,000 or more to invest, download our guide to help you plan ahead!

Get our FREE guide: How Solid Is Your Retirement Strategy?2

Staying on the topic of RMDs, you may want to consider a “qualified charitable distribution” (QCD) if you don’t need the cash and want to avoid having the RMD added to your taxable income for the year. The allowance is up to $105,000, and it would count towards your RMD if not satisfying it completely. 

The next tip would be to explore whether there are any opportunities for tax loss harvesting, i.e., realizing capital losses in your portfolio to offset gains made for the year – which could reduce or eliminate capital gains taxes. Just take care not to violate the wash sale rule, which says that you must wait 30 days before and after the sale to purchase a security that is “substantially identical” to the position you sold.  

A final tip would be to consider charitable contributions to close out the year. If you make substantial charitable contributions and itemize them, you may be able to take a deduction that’s greater than the standard deduction. These deductions are however limited to a percentage of your adjusted gross income, so be aware of that. Deductions that exceed the limit can also be carried forward for five years. If you donate appreciated property like stocks, bonds, or other securities, you may be able to claim the deduction and avoid paying capital gains tax on the securities’ appreciation, as long as the gains are long-term (held more than a year).

In addition to considering charitable contributions to close out the year, it’s important to manage a diversified portfolio that aligns with your investment goals and addresses potential ‘what ifs.

To better prepare for what’s to come, I recommend downloading our free guide, How Solid Is Your Retirement Strategy?3 for valuable and practical ideas to help build a “weatherproof” retirement strategy. It covers topics, such as:

If you have $500,000 or more to invest, get our free guide, today!

Disclosure

1 Wall Street Journal. September 18, 2024. https://www.jpmorgan.com/insights/wealth-planning/taxes/7-strategies-to-consider-before-year-end

2 ZIM may amend or rescind the guide “How Solid Is Your Retirement Strategy?” for any reason and at ZIM’s discretion.

3 ZIM may amend or rescind the guide “How Solid Is Your Retirement Strategy?” for any reason and at ZIM’s discretion.


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