It may feel like we are just now seeing the first signs of Fall–leaves changing, chilly mornings, and whatever this pumpkin spice phenomenon is. So why are those of us in financial planning already talking about “year-end planning”? There are two reasons.
- Many decisions have annual limits and deadlines, such as contributing to portfolios, charitable giving, and tax-efficient strategies.
- No one wants to scramble for paperwork at the last minute, especially during the holidays.
With that in mind, here are three areas we are encouraging all of our clients to visit before that first Thanksgiving turkey-induced food coma sets in.
1. Our Savings Progress vs. Long-Term Goals
This is always our #1 area to revisit. As we come down the final stretch of the year, it’s important for us to step away from our busy lives and see how we’re doing regarding our long-term goals.
- Have we been saving as diligently as our plan recommended?
- Have we maximized our 401(k) and IRA contributions?
- Do we need to top off any savings accounts before Christmas shopping?
This is a savings conversation, but it’s also a tax planning conversation. We want to make sure we are putting those dollars into the ideal kinds of accounts for tax benefits.
2. Lowering Your Taxable Income
Second, we want to look at taxes. While we are always considering taxes throughout the year, there are key decisions we can make in the final quarter of the year. A few examples:
- Again, have we maxed out your tax-efficient retirement savings accounts?
- Are there tax loss harvesting opportunities to offset capital gains taxes?
- Can we do some charitable giving to support causes you care about in a tax-efficient way?
- If you’re retired, can you use qualified charitable distributions to lower your taxable income?
We always operate from an “eyes wide open” perspective, but this is also a valuable window to introduce us to your CPA so we can collaborate with them on your behalf. By working together, we may be able to uncover additional tax savings opportunities.
If you have not introduced us to your CPA, we welcome the conversation!
3. College Savings Adjustments and Distributions
The last major category is college savings accounts. For many families, this might just mean revisiting your pace towards your goals for kids or grandkids. The earlier we can fund your 529, the longer the runway it has to drive growth in your portfolio.
One important note if you have kids approaching or currently in college: let’s make sure we’ve raised the appropriate amount of cash to be prepared for back-to-school costs.
An additional consideration is if you have kids currently attending college that you receive reimbursement for the current expenses. Your 529 reimbursements must be done in the same year you incur the expense.
Ready For Year-End Conversations?
In a nutshell, year-end planning involves making time-sensitive decisions that keep us on track with our long-term goals. Let’s make sure we’re taking opportunities to put your money to work for you.
If you are an existing client or you’re looking to update your retirement plan, we welcome the opportunity to connect. Let’s give you peace of mind that comes from knowing you’re on the right track.