Stabilize Your Financial Future: Essential Actions Before 2024 Ends
As the year winds down, now is the perfect time to review your financial situation and ensure you're on track to meet your goals. Whether you're planning for retirement, optimizing tax strategies, or preparing for a major life event, these year-end financial tasks can help set you up for success in 2025.
1. Maximize Retirement Contributions
If you haven’t hit the annual contribution limit for your retirement accounts, now is the time to do so. For 2024, the contribution limits are:
401(k): $23,000 (or $30,500 if you’re age 50 or older)
Traditional and Roth IRAs: $7,000 (or $8,000 for those 50 and older)
Confirm with your employer or financial advisor that your contributions are on track to hit these limits.
2. Harvest Investment Gains or Losses
Take advantage of tax-loss harvesting to offset capital gains or other income. Selling investments that have declined in value can help reduce your taxable income. Be mindful of the wash-sale rule, which disallows claiming a loss if you repurchase the same security within 30 days.
3. Review Tax Strategies
Charitable Giving: If you’re itemizing deductions, consider making charitable donations before December 31. Donating appreciated securities can also provide tax benefits.
Flexible Spending Accounts (FSAs): Use any remaining funds, as most FSAs have a "use-it-or-lose-it" policy by year-end.
Tax Withholdings: Review your paycheck to ensure sufficient taxes have been withheld to avoid underpayment penalties.
4. Assess Your Budget and Spending
Reflect on your 2024 budget. Were there unexpected expenses? Did you meet your savings goals? Use this information to fine-tune your 2025 budget and identify areas for improvement.
5. Plan for Education Costs
If you’re saving for education, consider making a contribution to a 529 plan. Many states offer tax deductions or credits for these contributions, and funds grow tax-free when used for qualified educational expenses.
6. Review Insurance Coverage
Life changes such as a new job, marriage, or the birth of a child might require adjustments to your insurance policies. Confirm that your coverage for life, health, disability, and property insurance is adequate for your current needs.
7. Check Estate Plans
Review your estate plan and beneficiary designations. Ensure your will, trusts, and power of attorney documents reflect your current intentions. This step is especially important if you’ve experienced a major life event in 2024.
8. Spend Down Gift Tax Exclusions
You can gift up to $17,000 per person in 2024 without triggering gift taxes. If you want to transfer wealth to family members, now is the time to take advantage of this annual exclusion.
9. Consult Your Financial Advisor
Schedule a meeting with your financial advisor to review your year-end strategy. They can provide tailored advice to maximize your opportunities and ensure you’re set up for success.
10. Start Thinking About 2025 Goals
Set financial goals for the upcoming year. Whether it’s paying down debt, saving for a major purchase, or increasing retirement contributions, having clear objectives can guide your financial decisions.
Final Thoughts
Taking the time to address these year-end financial tasks can bring clarity and a sense of control over your finances. At Ballast Advisors, we’re here to help you navigate these decisions and make the most of your financial opportunities.
IMPORTANT DISCLOSURES
The opinions expressed herein are those of Ballast Advisors, LLC and are subject to change without notice. The third-party material presented is derived from sources Ballast Advisors consider to be reliable, but the accuracy and completeness cannot be guaranteed. Past performance is not indicative of future results. Nothing contained herein is an offer to purchase or sell any product. This material is for informational purposes only and should not be considered investment advice. Ballast Advisors reserve the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. Ballast Advisors, LLC is a registered investment advisor under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about the firm, including its services, strategies, and fees can be found in our ADV Part 2, which is available without charge upon request. BAL-24-31
