Year-End Moves to Help You Prepare for Retirement

As the year wraps up, it’s a powerful time to check in on your retirement strategy, especially if you’re approaching your final working years or actual retirement date. This transition can be one of the most significant shifts in your financial life, as you move from accumulation to distribution and preservation. Taking thoughtful, proactive steps now can help set the stage for a confident and comfortable transition and retirement.

Let’s explore several key year-end moves to help strengthen your plan and prepare you for this next chapter.

Review and Optimize Your Investment Portfolio

Maximize Your Retirement Plan Contributions
If you’re in your peak earning years, maxing out your retirement plan contributions can make a significant difference in your long-term income and tax situation. For those over 50, catch-up contributions allow you to contribute even more to 401(k)s and IRAs.

Rebalance Your Portfolio
As the year ends, work with your financial professional to review and adjust your investment portfolio to ensure it still aligns with your risk tolerance and time horizon. Rebalancing can help compensate for concentrated positions and correct imbalances that can occur over time due to market shifts and asset growth.

Review Your Tax Efficiency and Year-End Opportunities

Taxes can have a major impact on your income, and the end of the year can be a great time to take actions that can help limit your tax liability for the year.

• Tax-Loss Harvesting: If you have investments in taxable accounts with unrealized losses, selling them to offset capital gains elsewhere can help reduce your overall tax bill. This can also be a tax-savvy way to help rebalance your portfolio.
• Year-End Giving Strategies: Charitable donations made before December 31 can count toward this year’s deductions if you itemize. Consider gifting appreciated securities to avoid capital gains tax while supporting causes that matter to you. A Donor-Advised Fund (DAF) lets you contribute and invest assets for future giving, enabling you to lock in a deduction now and recommend grants later.
• FSA or HSA Fund Usage: Flexible Spending Account (FSA) balances often follow a “use it or lose it” rule, so before the year’s end, review and spend down your available balance on eligible expenses as needed. Meanwhile, consider maximizing contributions to your Health Savings Account (HSA), which offers triple tax advantages. Contributions, growth, and qualified withdrawals are all tax-free. These account types can play an important role in covering healthcare costs as you move toward retirement, while also improving your tax position.

Taking these tax-focused actions now can help you retain more of your wealth and transition into retirement with greater confidence and financial flexibility.

Review Your Insurance Coverage

Your insurance needs can shift significantly as you approach and enter retirement. The end of the year can be a good time to explore disability and long-term care insurance options. As you approach retirement, these policy types can play an important role in your financial stability as well as your estate plan. Addressing this early can help protect your assets and your loved ones.

The end of the year can also be a good time to start planning for future Medicare enrollment. Reviewing your coverage options now can help you spot potential gaps and select plans that align with your anticipated healthcare needs. Medicare's annual open enrollment period runs from October 15 to December 7. In this window, you can make changes to existing Medicare Advantage or Part D plans.

Revisiting your life insurance policies and updating beneficiaries to reflect your current wishes and family dynamics can also be beneficial. If your financial situation or family dynamics have changed, now may be an optimal time to adjust coverage or to consider converting term policies to permanent insurance as an estate or legacy planning strategy.

Revisit Legacy Goals and Estate Plans

Year-end is an excellent moment to review all estate documents and make sure everything is up to date.

Check your will, any trusts, health directives, and powers of attorney. Update beneficiary designations on retirement accounts and insurance policies, both for yourself and for any aging parents in your care. These updates can help prevent unintended tax consequences and family disputes later on.

This is also a good time to explore charitable giving strategies, such as setting up a Donor-Advised Fund (DAF) or including charitable bequests in your will. Reviewing asset titling, ownership structures, and potential estate tax exposure can also help ensure your wealth is transferred efficiently and in line with your values. 

Set Goals for Your Pre-Retirement Phase

Beyond reviewing documents and investments, consider setting clear goals for the final years and months leading up to retirement. Here are some things you can do to prepare for the future.

• Start mapping out what your retirement year might look like, both financially and personally.
• Review projected income sources, including pensions, Social Security, and retirement account withdrawals. 
• Evaluate your Social Security claiming strategy. The decision of when to start benefits can significantly affect your long-term income. Explore various timing scenarios to see how you might maximize lifetime payouts.

Thinking through lifestyle changes, relocation plans, or part-time work can also help clarify the financial adjustments you may need to make. Laying this groundwork now helps make the transition smoother when the time comes.

Work With A Financial Professional

A financial professional can help you integrate these year-end moves into a cohesive retirement strategy tailored to your specific goals and timeline. From minimizing taxes to aligning your investment approach and fine-tuning legacy plans, professional guidance can help you avoid costly mistakes and build confidence as you move toward and into retirement.

Plan Ahead For Your Transition

Preparing for retirement is not just about closing out your professional chapter; it’s also about creating a new phase of life, with purpose, stability, and confidence. By taking proactive steps now, you can help ensure a smooth transition and that your retirement income can support you for years to come. Set up a meeting with your financial professional today to start building a retirement strategy that aligns with your goals and helps you feel prepared for the future.

^{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.}