December is here, meaning a new year is just around the corner. The end of the year is a busy time with shopping, traveling, and holiday gatherings. However, it's important to set aside some time to complete your year-end financial checklist so you are in optimal shape. Here are some essential areas of your finances to review:
Tax-Focused Investment Strategies
At Kore Financial Group, we take a tax-intelligent approach to wealth management, handling much of this process for our clients. Year-end is ideal for opportunities such as tax-loss harvesting, where we review your portfolio to identify tax-saving opportunities by offsetting gains with losses. We also look at your asset allocation and make necessary adjustments to align with your goals. Additionally, we consider how stock options and other investments may affect your tax return. If you haven't yet taken advantage of our complimentary portfolio review, this is a great time to consider it!
Business Planning
If you’re a business owner, the end of the year is ideal for evaluating your business’s performance over the past 12 months. As you finalize profit-and-loss statements and other year-end reports, consider your company’s retirement plan and key employee retention strategies. A robust benefits package can be a valuable tool for retaining top talent.
Also, review your succession plan: Is there a clear timeframe? How is your business valued? If you don't have answers to these questions, make it a point to develop or refine your succession plan in the year to come.
Retirement Planning and Withdrawals
If retirement is on the horizon, especially within the next five years, active planning is essential. Strategies like the “next year withdrawal strategy” can help optimize after-tax income, and a Roth conversion can reposition assets to avoid taxation upon withdrawal.
Additionally, choosing the right time to start Social Security can increase your benefits. These strategies are complex but valuable; we’re here to guide you through them. Set up a time to discuss these options during your next appointment.
Family Risk Management
Having adequate insurance coverage to protect your family is crucial, including life, disability, and long-term care insurance. Review your policies and adjust as needed, especially following any major life changes (such as a birth, death, marriage, or divorce).
Also, make sure you consider whether long-term care insurance is appropriate for your stage of life, keeping in mind that 70% of Americans should expect needing some sort of extended care in their lifetimes1. Insurance planning may be difficult to discuss, but it’s important to have a plan that protects your family’s future.
Legacy Planning
Legacy planning can be an uncomfortable topic but ensuring that your wishes are documented and shared with your loved ones is vital to a solid financial plan. Take time to review any wills, trusts, and estate plans you may have, especially if it’s been a few years since you’ve done so.
If you haven’t set up these documents, start considering your options. Beyond inheritance, think about your goals for charitable giving and how health changes may impact your plans. Regular reviews of your legacy documents help you stay aligned with your goals.
Education Planning
Review any education savings plans, such as 529 accounts, as the new semester approaches. Check account ownership, beneficiary designations, and allocations. If one child has unused funds, you can transfer the 529 account to another child, or you can potentially roll over unused funds to a Roth IRA. If you haven’t yet set up a plan or need assistance, we’re here to help you get started or adjust as needed.
Cash Flow Management
This time of year can be financially demanding, but proactive cash flow management can prevent financial strain. Review your expenses and budget for upcoming months and prepare for significant expenditures. Plan for employment or income changes and prioritize debt reduction to minimize interest costs. Also, try to avoid the “lifestyle creep” by staying within your means and adjusting your savings strategy to accommodate larger purchases or financial shifts.
We understand this list is extensive, and we know how busy this season can be. Feel free to schedule an appointment with us to review your plan, and we’ll help make next year a successful one together!
1U.S. Department of Health and Human Services
Asset allocation does not assure or guarantee better performance and cannot eliminate the risk of investment losses. Retirement plan withdrawals may be subject to taxation and penalties when withdrawn early.