Year-End Planning & Wealth-Building Strategies

Your peak earning years bring with them a powerful opportunity: the chance to build real financial momentum. But that momentum doesn’t come from income alone. It also comes from planning, strategic guidance, and informed decision making. As the year draws to a close, it’s a perfect moment to review your finances and take strategic steps that can help reinforce your foundation for building wealth.

Whether you need guidance on investments, taxes, insurance, or planning for your family’s future, here are key year-end moves to consider.

1. Evaluate and Rebalance Investments

Your portfolio may have shifted over the course of the year due to market performance. Rebalancing can help bring your asset allocation back in line with your goals and risk tolerance. Take a closer look at any employer stock options or restricted stock units (RSUs). If too much of your portfolio is concentrated in a single company—especially your employer—you may be exposed to unnecessary risk. A year-end review can help you assess diversification opportunities and make adjustments if needed.

The end of the year is also a good time to revisit your risk tolerance overall. Life changes—like a new job, a child on the way, or a change in income—can affect how much risk you’re comfortable taking on. This is a good topic of discussion to cover with your financial professional.

2. Review and Maximize Tax Efficiency

Tax season may still be a few months away, but in most instances, the window to impact this year’s tax bill closes on December 31. Consider these strategies that can help optimize your tax position before the calendar year closes.

• Tax-loss harvesting: If you have investments that lost value, consider selling them to offset capital gains elsewhere in your portfolio.
• Maximize contributions to tax-advantaged accounts: Consider maxing out your 401(k), 403(b), or 457(b). If you’re eligible, don’t forget about IRAs—even though you technically have until the tax deadline to contribute.
• Fund your HSA: Health Savings Accounts offer a triple tax benefit—contributions, growth, and qualified withdrawals are all tax-free. Consider maxing out contributions.
• Spend your FSA balance: Flexible Spending Accounts are “use it or lose it,” so be sure to deplete your funds before the deadline (or confirm if your plan offers a grace period).
• Give generously: Year-end charitable giving can also create tax benefits. You might consider establishing a Donor-Advised Fund (DAF). A DAF lets you make a charitable contribution now and receive an immediate tax deduction, but decide later which causes to support. It's a flexible, tax-efficient way to give back on your own terms and timeline.

3. Review Insurance Needs: Health, Life, and Disability

As your income grows and responsibilities increase, your insurance coverage should grow with you. Use the end of the year as an opportunity to review coverage and ensure your benefits reflect your current needs and lifestyle.

• Health insurance: Take advantage of open enrollment to compare plans, especially if your family’s coverage or medical needs have changed.
• Life insurance: Changes in circumstances such as a growing family or increased debt might mean your current coverage no longer fits. Review your policy to ensure it is sufficient for your current situation.
• Disability insurance: Your ability to earn an income is one of your greatest assets—protect it. Ensure you have sufficient coverage in place in case of illness or injury.
• Umbrella policy: If your net worth is rising, it may be time to consider additional liability protection through an umbrella policy.

4. Plan for Your Education Costs

Education planning isn’t just for those with young children, and it isn’t limited to college. Whether your family is preparing for a transition to a private school, a specialized program, or higher education, thoughtful planning is essential. The closer you get to these milestones, the more strategic you’ll need to be, but early planning is key. Here are some smart end-of-year moves that can help you prepare for future education costs.

• 529 contributions: Last-minute deposits may qualify for state tax deductions, depending on your state’s rules. New rules now allow unused 529 funds to be rolled into a Roth IRA for the beneficiary, offering a tax-advantaged way to jumpstart retirement savings. However, there are important conditions to consider—including a 15-year rule, annual limits, and a lifetime rollover cap. Make sure your education strategy accounts for both flexibility and compliance.
• Financial aid planning: FAFSA and CSS Profile forms rely on prior-prior year income. Consider how your income and investment decisions now may affect aid eligibility down the road.
• Forecast future costs: Use education cost calculators to estimate where you stand, or consult your financial professional to assess whether your savings plan is on track.

5. Set Goals for Next Year

A strong year-end review doesn’t stop at looking back, it also includes a thoughtful look ahead. These next steps can help you enter the new year ready to build wealth with confidence.

• Update your budget: Account for any known adjustments like housing costs, family expenses, or savings goals. Look for ways to automate contributions toward retirement, emergency savings, and large purchases.
• Take a net worth snapshot: Measuring your net worth on an annual basis can help you track progress year over year and highlights areas where you might need to adjust.
• Refresh your estate plan: Make sure wills, powers of attorney, healthcare proxies, and beneficiary designations reflect your current wishes.
• Plan for income growth: Are there opportunities for advancement, certification, or even side income that could align with your long-term goals? Make a plan to explore them in the coming year.

Final Thoughts: Keep Your Momentum Going

The end of the year is the perfect moment to step back, review, and refine your approach. A few proactive decisions now can help you take full advantage of your earning years, reduce your tax burden, and build wealth.

Talk with your financial professional about how to personalize these strategies to reflect your unique goals, risk tolerance, and timeline. They can help you uncover opportunities you might not have considered and create a clear action plan to move you forward.

With tailored guidance and a proactive approach, you can head into the new year with a solid financial foundation and personalized plan to keep you growing.

^{This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.}