8 Financial Planning Tips for Year-End

It hardly seems possible (is it a tryptophan-induced illusion?), but somehow Thanksgiving is in the past and Christmas will be here in less than three weeks. That sentence is not meant to cause widespread panic among our readers who haven’t even begun to think about holiday shopping, though we would understand if it did. Thank goodness for the Internet, right?

As you rush about from gathering to gathering, hopefully managing to steer fairly clear from the malls, your family here at Beacon would encourage you to pause and give some thought to your financial picture. Here are a few actions to consider as 2014 winds to a close (see also Andrew Silton’s column in the Raleigh News & Observer last weekend):

1. Beneficiary review. Have you had a life event during 2014 (marriage, birth of a child, divorce, etc.) that would require a change in who you’ve designated as beneficiaries to your various financial assets? Now is a good time to ensure that your beneficiary information reflects who you would actually desire to receive a benefit should something happen to you.

2. Review and rebalance your invested assets.* Considering the run-up the market has experienced year-to-date, have you checked your 401k and other accounts to make sure they have been rebalanced appropriately? Failure to do so could expose you to more risk than is necessary.

3. Increase your 401(k) contributions. 2015 will see a $500 cost of living adjustment to the maximum amount of 401(k) and 403(b) salary deferral, increasing the annual limit from $17,500 to $18,000 ($24,000 if you’re age 50 or older.) If it makes sense to max out this limit, don’t forget to increase your contributions in the New Year.

4. Donate to charity. There are many, many amazing charities in Raleigh and around the world. Take advantage of the tax-deductibility of charitable contributions and help support your favorite organizations. Making any substantial donations with appreciated stock provides a double benefit: Neither you nor the charity pays capital gains taxes and you have the opportunity to reduce your basis in the asset buy re-purchasing with the cash you might otherwise have used for the donation.

5. Harvest tax losses or gains.* This is best done throughout the year, but if you haven’t harvested losses (or triggered gains to offset existing losses), then it may be wise to do so before year-end.

6. Review and update your financial plan. Does your plan continue to reflect your values and long-term goals? Have you made updates to your plan as life events necessitate? Take advantage of this time to make sure your plan isn’t being neglected.

7. Use up FSA money. If you still have money set aside in a flexible spending account for health care expenses, see if you can order new glasses or schedule that dental work you’ve been putting off.

8. Budget review. (Mostly) no one likes to do this, but the end of a year is a good time to take a look at the full picture of your budget, accounting for one-time expenses as well as those that are more recurring in nature. Are there areas of your budget that are in conflict with your values? If giving is important to you, did 2014 show that as a reality? Are you saving what you said you would in order to meet that really important goal?

We’re not suggesting that you Scrooge the holiday spirit by overburdening your family with financial discussions, but simply that by giving some thought and time to your finances now, you might keep from overburdening them later with unanswered questions and heightened financial stress.

As always, if you have any questions about the suggestions above (or anything else), don’t hesitate to give us a call.

*Beacon clients: These tax-planning operations are performed in the course of our ongoing portfolio management as your financial advisor.

Jared Korver
[email protected]

A product of small-town North Carolina (Carthage, to be exact), I’m proudly married to my best friend and co-adventurer, Amy. Together, we have two sons–Miles and Charlie–and could more or less start a library from our home. I love being outside, can’t read enough, am in the habit of writing haikus, and find food and coffee to be among life’s greatest treasures.