The Early Bird Advantage: Why Timely Year-End Planning is Essential

Every year, the holiday season sneaks up on us and, before we get to turn around, it’s over. This frenzied time of year can be over-filled with shopping excursions and office parties, and this year with election season distractions.

It’s easy to let financial planning slip through the cracks at the very moment when it may have the greatest impact. Here are some tips for timely year-end planning that may make a big difference.

Saving on Taxes

One reason that many people take time during this busy season for year-end planning is to save money on taxes. Fourth Quarter financial reviews can support good decisions that might help manage your tax liability.

The nice thing about this is that you still have options on actions that can impact this year's taxes. A few examples:

• Tax-Loss/Gain Harvesting – do you have Unrealized gains and losses that, if recognized this year, might offset each other? Offsetting capital gains with capital losses might lower your 2024 tax bill and better position your portfolio going forward. The inverse, strategic selling of appreciated assets in taxable accounts might take advantage of lower tax rates
• Charitable Contributions - if you are obliged to take Required Minimum Distributions (“RMDs” ) from retirement accounts and don’t need the income to cover lifestyle expenses, maybe you might want to consider making charitable non-taxable contributions directly from your retirement plan? And/or gifts of appreciated securities from a taxable account?
• Roth conversions – RMDs can’t be used for Roth conversion, but pre-paying income taxes on retirement account values can save money in the long run by helping to build future non-taxable investment income.

Setting Financial Goals for the New Year

While year-end planning requires you to glance in your rearview mirror, it’s also an excellent opportunity to set your sites on the open road before you – and plan your financial goals for next year. Are you ready to save more money? Pay off debt? Make your first investment? Plan for retirement?

Set your goals and focus for 2025.

Avoid Last-Minute Stress

When you don’t leave things to the last minute and, instead, schedule them in advance, you may have time to think over a problem instead of reacting under pressure. Investment strategies may need updating as life happens. You may have more opportunities to make good decisions by  planning ahead, reality-checking your goals and budget, and reviewing which strategies might best suit going forward.

Prepare for Holiday Spending

Paying for the holidays can be expensive. How much can you realistically spend on gifts, trips, and other expenses? Can you manage this without dis-investing Can you avoid a huge January credit card bill?

Review Your Investments

Is it time to rebalance your portfolio? Any changes needed to stay on track – or adjust to any new track?

Planning ahead might help save money, manage stress, and position you to begin the new year better organized to pursue your goals.

Be an “early bird” and put your year-end and next-year plans in place now.

Important Disclosures:

Investing involves risk including the loss of principal.

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

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

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