As the year comes to an end, it’s time to take stock of our finances and make sure we’re on track for a successful 2024. Here are 10 crucial financial steps to take:

1. Maximize Retirement Contributions
Consider increasing your contributions to your 401(k) and IRA, and take advantage of catch-up contributions if you are 50 or older. The 2023 401(k) contribution limit is $22,500, with an additional $7,500 catch-up contribution. The IRA contribution limit is $6,500, with an additional $1,000 catch-up contribution. Even a small increase in your contributions can make a big difference in your long-term savings.

2. Consider Tax-Loss Harvesting
Collaborate with your financial advisor to identify opportunities for tax loss harvesting. Tax loss harvesting is a strategy to reduce capital gains taxes by selling investments that have lost value and repurchasing similar ones. The IRS limits your net loss to $3,000 and any excess can be carried forward to future years.

3. Finalize Year-End Donations
Lower your taxable income by making charitable donations. Explore options like donor-advised funds (DAFs) or employ a “bunching” strategy to maximize deductions while supporting causes important to you.

4. Review and Update Beneficiaries
Regularly reassess and update beneficiary designations to ensure they align with your estate planning objectives. These designations can supersede will and trust directives, making it crucial to keep them current.

5. Diversify Concentrated Positions
Rebalance your investment portfolio, considering diversification to mitigate risks associated with concentrated positions. Ensuring your portfolio aligns with your objectives and risk tolerance is crucial. As a general rule of thumb, no single stock should make up more than 10% of your investments.

6. Reevaluate Healthcare Coverage
Changes in life or health should prompt a reassessment of your healthcare coverage. Utilize your employer’s open enrollment period to make necessary adjustments and consider contributing to health savings accounts (HSAs) or flexible spending accounts (FSAs).

7. Check Your Emergency Fund
If you tapped into your emergency savings during the year, now is the time to rebuild it. Aim to maintain three to six months’ worth of expenses in a liquid account to safeguard against unexpected financial challenges.

8. Review Existing Insurance Coverage
Evaluate your insurance coverage in light of any changes in your life or financial situation. Consult with your financial advisor to determine if adjustments are needed to ensure sufficient protection.

9. Review Estate Planning Documents
If you haven’t implemented estate planning documents, do so promptly. Schedule a review with your financial advisor and estate planning attorney to ensure these documents align with your current wishes.

10. Freeze/Check Credit Report:
Use the free annual reports from major credit bureaus to review your credit score and correct any errors. Once you have done this, protect your financial identity by freezing your credit. This will prevent anyone from opening a line of credit in your name if your identity is ever compromised.

As the year draws to a close, these strategic financial moves will not only strengthen your financial foundation, but also prepare you for a successful transition into the new year. If you need assistance in wrapping up your 2023 finances, our team at PMG Wealth Management is here to help. We look forward to assisting you on this journey!

George Maroudas, CFP®

George Maroudas, CFP®

Twitter @ChicagoAdvisor


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice.