Strategic Year-End Planning for Strong Retirement

As the year comes to a close, it’s an ideal time to assess your financial situation and make adjustments for a strong transition into the next phase, especially as you approach retirement. 

This article will guide you through key year-end strategies designed to optimize your retirement planning. From tax-efficient distribution planning to ensuring your investments align with your retirement goals, we’ll cover the most important steps to take now. Additionally, we’ll explore how to review your insurance, update your estate plans, and plan for your healthcare coverage, ensuring you enter the next year feeling confident and well-prepared.

1. Take Action on Tax-Efficient Distribution Planning

The end of the year is a great time to review your strategies and ensure you’re taking full advantage of available opportunities.

• Review Required Minimum Distributions (RMDs): Ensure you've taken the correct amount to avoid penalties. RMDs start at age 72 for traditional IRAs, 401(k)s, and other tax-deferred accounts. Missing an RMD can result in a hefty 50% penalty, so it’s important to double-check that all required distributions are made before the end of the year.
• Plan Income & Distributions Strategically: Coordinate distributions from retirement accounts based on your income needs and tax bracket thresholds. Being mindful of when and how you draw income can help minimize your tax exposure and preserve more of your retirement savings.
• Execute Roth Conversions: Consider converting pre-tax assets to a Roth IRA if it makes sense for your long-term tax outlook. By converting funds, you pay taxes now rather than during retirement, potentially reducing your taxable income later. 
• Tax-Loss Harvesting: Work with your advisor to offset gains and manage tax exposure through tax-loss harvesting. By selling investments at a loss, you can use those losses to offset any taxable gains, helping to reduce your overall tax burden for the year.
• Review Withholding and Estimated Taxes: If you’ve had significant life changes, like a raise, side income, or retirement account withdrawals, adjusting your tax withholding or estimated tax payments now can help avoid underpayment penalties and ensure you're not caught off guard next tax season.

2. Optimize Your Investment Strategy and Income Sustainability

Now is a great time to reassess whether your current investment allocation still supports your retirement goals and income needs.

• Revisit Your Investment Allocation: Ensure your portfolio is still aligned with your goals, time horizon, and risk tolerance. Market fluctuations can lead to asset imbalances, so it’s important to review your portfolio’s performance and adjust as necessary to maintain a diversified, well-balanced investment mix.
• Rebalance if Needed: Lock in gains or realign with your intended asset mix. Rebalancing ensures that you are not overexposed to high-risk assets and that your portfolio remains on track to meet your long-term retirement goals.
• Evaluate Income Stability: Review whether your income sources (pensions, annuities, dividends, etc.) are still sufficient to cover your expected retirement expenses.

3. Evaluate Healthcare & Insurance Coverage for Future Security

Healthcare needs and insurance coverage should be a focal point in your year-end planning, especially as you get closer to retirement. 

• Review All Policies: Life, long-term care, disability, and property/casualty coverage may need to be adjusted as your lifestyle and needs change.
• Conduct a Medicare Review (If Eligible): Even if you're already enrolled, Medicare’s open enrollment is a valuable opportunity to compare plans. Costs, coverage, and provider networks can change each year—make sure your current plan is still a good fit for your needs.
• Identify Gaps in Care Planning: Long-term care needs can be costly and often aren’t fully covered by Medicare. 

4. Strengthen Your Legacy & Estate Plan

Ensure that your wealth is transferred to the next generation according to your wishes. Beyond updating documents, consider discussing your legacy plans with loved ones. Sharing your intentions can help prevent confusion, clarify expectations, and ensure your wishes are fully understood.

• Review and Update Legal Documents: Make sure your will, trusts, powers of attorney, and healthcare directives are up to date. These documents need to reflect your current family structure, assets, and wishes.
• Check Beneficiary Designations: Ensure beneficiary designations are up to date on all accounts and policies. Even if you’ve created a trust or will, outdated beneficiary forms can override your intentions, so it’s important to review and update these regularly.
• Confirm Asset Titling and Trust Funding: Review how your assets are titled and ensure they align with your estate plan to avoid unnecessary probate fees or tax complications.
• Plan Your Giving Strategy: Consider making year-end charitable gifts, setting up a Donor-Advised Fund for long-term giving flexibility, or using Qualified Charitable Distributions (QCDs) from your IRA if you are 70½ or older to reduce taxable income.

5. Align Your Spending with Lifestyle & Values-Based Goals

Year-end planning gives you a chance to reflect on how your spending can align with your personal values and goals.

• Live Fully Now: Start thinking about how to incorporate meaningful activities like travel, hobbies, or family time into your retirement plan, so you can live fully and embrace this new phase of life.
• Evaluate Discretionary Spending: Review discretionary spending such as travel, hobbies, home updates, or family gifting. Be intentional about how you allocate your resources to ensure you’re investing in things that bring you fulfillment and joy.
• Adjust for Life Transitions: Consider how life transitions such as caregiving needs, relocation, or evolving family roles will impact your financial planning. Proactively planning for these changes helps ensure your retirement goals stay on track.

6. Meet with Your Financial Professional to Refine Your Plan

Your financial advisor can help you integrate these year-end moves into a cohesive retirement strategy tailored to your specific goals. 

Meeting before year-end ensures you can act on any opportunities before deadlines pass and step into retirement feeling better prepared and supported.

Plan Ahead for a Confident Retirement 

By implementing the strategies outlined in this article—whether it’s optimizing your tax planning, adjusting your investment strategy, or updating your insurance or estate plans—you can create a solid foundation for the future. Taking proactive steps now helps ensure your wealth can support your goals and provide the lifestyle and confidence you deserve for years to come.

^{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.}