Your Year-End Wealth Planning Checklist

Jessica Culpepper, MBA, CPA, CFP®

Director of Financial Education

Last Updated
December 19, 2022
Woman's hands with pen and mobile phone writing out a checklist

Important Financial Steps to Take Before the New Year

There’s a lot to do as the end of the year approaches — holiday shopping, Christmas cards, New Year’s plans, cookie baking, ice skating … the list goes on and on. Another important task that shouldn’t be overlooked is your year-end wealth planning. We’ve put together a straightforward list to keep you on track. Work with your wealth manager to check these items off your list before getting back to your holiday festivities.

  • Review your financial plan in consideration of any changes that have occurred in your life or goals over the past year.
  • Rebalance your portfolio to your original (or an updated) asset allocation to help lock in gains from top-performing sectors and ensure your investments remain in line with your objectives and risk tolerance.
  • Finalize your charitable donations. If you don’t currently file an itemized tax return, it may make sense to implement a “bunching” strategy, combining multiple years’ worth of charitable donations into a single large donation and filing an itemized return during the year in which you make the large donation.

Another strategy is to establish a donor-advised fund (DAF), which allows you to receive an immediate charitable tax deduction in the current year (by filing an itemized return), while having the flexibility to make donations from the DAF to your favorite charities at a later date.

  • Make gifts to family members. If you have a goal of financially supporting your loved ones, it can make sense to make smaller gifts over the course of several years, rather than giving one large gift in a single year. That’s because an individual can transfer assets valued at up to $16,000 annually ($32,000 if married filing jointly) per recipient without incurring the gift tax.

As long as you don’t give more than this amount to a single individual in a single year, you aren’t required to file a gift tax return, and the gift is not counted toward your lifetime estate tax exclusion amount.

  • Increase your retirement plan contributions. If you can, max out your 401k and IRA contributions before the end of the year. The 2022 401k contribution limit is $20,500 ($27,000 if you’re age 50 or older), and the 2022 IRA contribution limit is $6,000 ($7,000 if you’re age 50 or older).

If you’re unable to hit these maximums, consider increasing your retirement plan contributions by any amount you can. Even a 1%-2% increase can make a big impact on your retirement savings over time, and you’re unlikely to notice the decrease in your take-home pay.

  • Plan for any year-end bonuses. While everyone deserves to splurge a bit with a year-end bonus, don’t completely lose sight of your financial priorities. Use your bonus wisely by considering paying down any outstanding debts, then adding to your savings. Any additional funds can be used to purchase something you’ve been wanting, but try to resist the urge to make an impulse buy. Also, if charitable giving is an important priority, using a portion of your year-end bonus is a great way to make your annual donation.
  • Review your beneficiary designations. This is a tip we bring up again and again, yet it’s worth reiterating. Beneficiary designations can supersede will and trust directives, so it’s vital that you review your beneficiaries at least annually and any time you experience a major life event.
  • Rebuild your emergency fund. If you dipped into your emergency fund in 2022, now’s the time to recommit to building it up again. Plan to have a minimum of three to six months of expenses saved in a liquid account to cover any unexpected expenses.
  • Make a plan to pay off debt. Resolve to pay extra each month (e.g., $100) to any outstanding consumer debt. Also consider directing additional funds toward paying down your mortgage principal. The sooner you tackle your debt, the sooner you’ll achieve be able to work toward achieving financial freedom.
  • Look for opportunities to lower your tax liabilities. Your wealth manager can help you identify opportunities to lower your tax bill by taking advantage of year-end tax-loss harvesting, asset location strategies, charitable giving and more.
  • Check your credit report. Federal law gives you the right to get a free copy of your credit report every 12 months from each of the three major credit bureaus (Equifax, Experian and TransUnion). Through December 2023, everyone in the U.S. can get a free credit report each week from all three credit bureaus. Use this opportunity to double check your credit score and identify any unexpected errors.
  • Make a plan to save for upcoming expenses. Are you planning on making any large purchases in the next year or two? Now’s a great time to plan for how you’ll either finance or pay out of pocket for your purchase. Your wealth manager can help you establish a plan that meets your needs.
  • Review your estate planning documents. This is another one we include in virtually every checklist — it’s that important! If you haven’t yet implemented estate planning documents, it’s vital to do so immediately, regardless of your age. If it’s been a while since you reviewed your estate plan, schedule a call with your estate planning attorney to make sure your wishes are still reflected in your existing documents.

Need some help ending the year on a positive financial note? Creative Planning is here for you. Our teams help ensure your entire financial life is working toward achieving your long-term goals. For guidance wrapping up your 2022 finances, schedule a call with a member of our team.

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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