Finish Strong: Essential Financial Moves to Make Before Year-End

By Brett Gottlieb

The past few years have been a roller coaster ride for many, filled with economic uncertainty, rising inflation, and whispers of potential recessions. As we approach 2025, it’s natural to wonder if brighter days lie ahead. While these concerns can feel overwhelming, it’s important to remember that your personal finances don’t have to reflect the turbulence of the broader economy.

Now is the perfect time to take charge of your financial future and create a solid foundation for the year ahead. With the holiday season upon us, many are eagerly anticipating the fresh start that a new year brings. Instead of waiting for January 1st to kick off your financial resolutions, why not take proactive steps before the year ends? Here are 10 essential financial actions to help make sure all your bases are covered as we transition into a new chapter.

1.   Assess Your Emergency Fund

Now is the time to ensure that you have enough money set aside in your emergency fund or create a plan to build this up over the next year. An adequate emergency fund should cover 3-6 months of necessary living expenses, including mortgage or rent, utilities, groceries, transportation, etc.

With all stock market uncertainty and recession fears, many experts have suggested maintaining a larger emergency fund closer to 8-12 months of expenses. If you’re single, or your household only has one source of income, consider saving on the higher end of this scale to make sure you’re covered in the event of a job loss or reduction in pay.

However much you save, be sure this money is held in a highly liquid account. It needs to be readily available and easily accessible, but it should also be in an account that offers a competitive interest rate so that you don’t lose out on potential growth.

2.   Max Out Your Retirement Contributions

Before the end of the year, be sure to max out your retirement contributions. Many employers offer retirement plans like 401(k)s, 403(b)s, and 457s which allow you to contribute up to $23,000 annually in 2024.

These contributions are automatically deducted from your paycheck and won’t show up as part of your annual income, so the more you can maximize your contributions during the year, the less taxable income you will have come April 15th. With this strategy, you can defer taxes until your retirement years when you could potentially be in a lower tax bracket. 

3.   Contribute to a Traditional IRA

Contributing to a traditional IRA is another way to reduce your AGI if your income is within certain limits. By contributing pre-tax funds, you can effectively reduce your current-year tax liability, but you will owe tax on both the contributions and the account growth when you withdraw the funds in retirement. The 2024 contribution limit for traditional IRAs is $7,000 with additional $1,000 catch-up contributions for individuals over the age of 50. Like HSAs, contributions can be made until April 15th for the 2025 tax year, but the sooner they are made, the less likely you are to forget.

4. Use Up Your Employee Benefits

While every employee benefit plan has its own rules and regulations, many of them expire or reset at the end of the year. You worked hard for these perks, so be sure to use them before it’s too late!

Medical and Dental Benefits

Now’s the time to take care of all your healthcare needs before your deductible resets. Dental plans in particular often have a maximum coverage amount. If you haven’t used the full amount and anticipate any treatments, make it a priority to set an appointment before December 31st.

Flexible Spending Account

Like your health insurance benefits, you’ll want to use up as much of your FSA (flexible spending account) dollars as possible by the end of the year since you are only allowed to carry over $640 for the plan year-ending 2024. That being said, check the restrictions on your account to see what the money can and cannot be used for, and take care of any needs you may have as allowed by your plan.

Sick and Vacation Time

Depending on your company, your sick or vacation time might expire at the end of the year. Check with your HR department to learn about any expiration dates. If it does expire, fit in a last-minute staycation or take some time off to work on projects you’ve been putting off. If you need to make any trips to the doctor, schedule those appointments now to make use of paid-time-off benefits before you lose them.

5. Utilize Tax-Loss Harvesting

Tax-loss harvesting involves selling investments at a loss in order to offset the gains in your portfolio. By realizing a capital loss, you are able to counterbalance the taxes owed on capital gains. The investments that are sold are usually replaced with similar securities in order to maintain the desired asset allocation and expected return. Given the unprecedented market volatility throughout the past few years, this can be a great way to make the most out of a losing situation by using an investment loss to offset your tax liability.

6. Consider Charitable Donations

Charitable donations are another option that can be reviewed as the year-end approaches. The holidays are a great time to give money and assets to your favorite non-profits, churches, and organizations.

Charitable donations can be used as part of your overall tax strategy, or as part of a comprehensive legacy plan. Both options provide many potential benefits including supporting causes you care about, reducing your taxable income, and reducing your taxable estate.

7. Make the Most of the Annual Gift Tax Exclusion

If you’re in the giving spirit as you head into the new year and you want to reduce your taxable estate, consider making gifts up to the annual exclusion amount. In 2024, individuals can give to each recipient (and to an unlimited number of recipients) up to $18,000 without triggering gift tax. Not only that, but the beneficiary of your gift will not have to report it as income. This is a great way to spread your wealth amongst family and friends.

8. Revisit Your Plans and Policies

Lastly, take another look at your estate plan and insurance coverage. If you took the time and energy to create an estate plan, check it periodically to ensure all the documents are up to date and no major details have changed.

Your insurance needs may also change as the year goes by, so periodically review your coverages and designated beneficiaries to bring them up to date to reflect your current financial situation. For example, if you paid off debt, you may not need as much life insurance coverage since your family’s liabilities have decreased. You might also want to evaluate your need for other types of insurance, such as long-term care or disability insurance.

9. Review & Align Your Asset Allocation

The end of the year is also a great time to review your asset allocation strategy. Given the dramatic market volatility and historic levels of inflation over the last year, it’s crucial to evaluate your investments and make sure your portfolio is properly diversified. It should also be tailored to your specific risk tolerance level, ensuring you earn enough returns to keep up with inflation but you’re not overexposing yourself to risk.

If you would like to discuss asset allocation options, including ESG, please contact our office.

10. Collaborate With an Advisor

At Comprehensive Advisor, we’re here to help you regain control of your finances after the ups and downs of the past few years. Whether you’re looking to save more, invest wisely, or plan for your future, we can work together to make your financial New Year’s resolutions a reality in 2025.

Don’t wait to take the first step—our team is ready to support you on your financial journey. Reach out to us today by emailing us at info@ComprehensiveAdvisor.com or calling (760) 813-2125, and let’s start crafting a personalized plan that aligns with your goals for 2025 and beyond.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

With a combined experience of over three decades in the financial services industry, our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial solutions for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Insurance products are offered through the insurance business C.A. Financial & Insurance Services. C.A. Financial & Insurance Services, is also an Investment Advisory practice that offers products and services through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. AEWM does not offer insurance products.  The insurance products offered by C.A. Financial & Insurance Services are not subject to Investment Adviser requirements.  Investing involves risk, including the potential loss of principal. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. CA Ins. Lic. #6000262.  2680181 – 11/24