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Financial Planning
Dec 2023

Year-End Financial Planning Checklist

By Allison Barrientos, CFP®, CPA

As we prepare to ring in the New Year, you may have begun think ahead and consider your 2024 goals or resolutions. But, not too fast, 2023 still has a lot to offer us. To ensure you close out the year on good footing, take some time to review your financial situation and make any needed adjustments. A few items to focus on are included below:

Review your employee benefits

Employers often have open enrollment periods in December, making this a perfect time to review the benefits available to you. Look at your healthcare selection and consider whether any changes in your or your dependent’s health may warrant a change in coverage. Additionally, if you have an FSA plan through your employer, be sure to use up the funds for 2023 by your employer’s deadline.

Life transitions (i.e. marriage, birth, death divorce) may necessitate changes to benefits such as life and disability insurance. Coverage obtained through an employer’s group plan are often much more cost effective than obtaining a policy in the open market.

Review your employer-sponsored retirement plan contributions. Have you maxed your contributions for year, if you are able to? If not, have you at least contributed enough to receive the company match? Don’t forget to look at the investments in the account. Are you happy with the ratio of stocks, bonds and other assets or should you rebalance as well as the balance between US and international investments? Finally, are your beneficiaries up to date?

You work hard and have earned the employee benefits available to you, so be sure they are working for your benefit.

Conduct a year-end tax review

It’s easy to put this off until next March or April, though I encourage you to spend some time on it now, before the tax year closes. Are you subject to Required Minimum Distributions from your IRA this year? Ensure you take the distribution by year-end to avoid harsh penalties. If charitably inclined and over age 70.5, you may consider making charitable donations directly from your IRA. This distribution qualifies as an IRA withdrawal but is not taxable income to you.

Have a life transition (i.e. job loss, retirement, promotion) occurred this year that will result in significantly different income? If so, talk to your tax preparer about whether it makes sense to defer or accelerate income or expenses to take full advantage of the change.

Review your financial plan

Think about whether your spending this year was on track with your expectations, and if not, what derailed it. If things were unexpectedly tight, it can be useful to review spending over the last year. If, like me, you primarily use a rewards credit card for purchases, you can often find a summary of transactions by category for various time periods on the credit card’s website.

Sit down with your spouse and discuss your goals for 2024. What house projects need to be tackled, do you have children expected to start college or get married, where and when will you travel? Set a budget for your priorities and determine how you will fund each goal.

Assess your investments

Step back and review your overall risk tolerance. What is the expected time horizon for your investments? If you have many years until retirement and do not expect to draw on your portfolio until then, you have much more capacity to weather the storms a risky portfolio can wield than if you are already retired and drawing from the portfolio to fund the majority of your living expenses. It is important to match your tolerance for risk to your target allocation between safe assets like bonds and growth assets like equities.

Just as with your employer-sponsored retirement plan, review the specific ratio of stocks vs. bonds, and international exposure vs. U.S. exposure. How did these ratios change since last year? If certain assets are under- or over-performing this might leave your portfolio off target and require you to rebalance back to an allocation that matches your risk tolerance.

While this may seem a bit daunting, especially during the busy holiday season, I encourage you to pay yourself first by setting aside some time to review your financial situation to ensure you are on track to meet your goals.. As Yogi Berra said, “If you don’t know where you are going, you might wind up someplace else.”

The information provided herein is for educational purposes only, and should not be construed as advice, including, but not limited to tax, legal, insurance, investment, or retirement advice. For your specific planning needs, please seek the advice of Integris Wealth Management, your tax accountant, attorney, insurance agent, or other professional as appropriate. Investing involves the risk of loss.

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