6 Year-End Moves a Financial Planner Recommends for Your Retirement Plan
Filing a tax return usually feels like a chore to get through and forget about until next year. Trent Burley, partner and private wealth advisor at Northwestern Mutual's McGill Junge Wealth Management, sees it differently.
He treats the tax return itself as a checklist for spotting gaps in a retirement plan before they turn into real problems.
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1. Max Out Retirement Contributions While There's Still Time
Burley starts with the accounts that carry the most upside: a 401(k) plan, an IRA or a health savings account for anyone eligible. Reviewing contribution levels before the year closes out gives people a chance to add more if the budget allows.
"If there is room in the budget, increasing contributions can help strengthen long-term savings and, depending on the account and individual circumstances, may provide tax benefits," Burley said.
He added that hitting the max isn't the only outcome worth chasing here. A smaller bump still adds up over time.
2. Check Whether Your Portfolio Still Matches Your Goals
A year of market swings can pull a portfolio away from its original mix without anyone noticing. Strong gains in one sector can leave an investor holding more risk than they meant to carry. Burley recommends using year-end as a checkpoint.
"Year-end is a good time to review whether investments still align with long-term goals, time horizon and risk tolerance and rebalance where appropriate," he said.
3. Look for Tax-Loss Harvesting Opportunities
Losses in a taxable account aren't just a downside to accept. Burley said investors can sometimes use them to offset gains elsewhere and lower what they owe overall.
That said, he cautioned against letting the tax angle drive the whole decision. Tax considerations belong inside a broader investment strategy, not as the sole reason to sell something.
4. Stop Letting Cash Sit Idle
Cash balances build up gradually, often without much thought behind them. Burley pointed to this as one of the easiest things to overlook.
"It's easy for cash balances to build up over the course of the year without much thought about whether that money is being put to its best use," he said.
An emergency fund and near-term expenses still come first. Anything beyond that could go toward paying down debt, investing or other longer-term goals.
5. Make Charitable Giving Part of the Strategy
For anyone already giving to causes they care about, Burley suggested using year-end to look at how that giving gets structured. Donating appreciated assets or bundling several years of contributions into one tax year can open up additional benefits (depending on individual circumstances), all while supporting the same causes.
6. Update Beneficiary Designations and Estate Documents
Life moves faster than paperwork usually does. Marriage, divorce, a new baby, a home purchase -- any of these can leave old beneficiary designations or estate documents out of step with what someone actually wants now. Burley said a year-end review is the simplest way to catch that drift before it matters.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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