Year-End Financial Planning Setting Yourself Up for a Great 2025

Ari Baum, CFP®

AS RUNNERS KNOW, EVERY GREAT RACE STARTS WITH PREPARATION, PACING, AND THE RIGHT STRATEGY. THE SAME PRINCIPLES APPLY TO FINANCIAL PLANNING, ESPECIALLY AS WE APPROACH THE FINISH LINE OF 2024. JUST LIKE A WELL-RUN MARATHON SETS THE STAGE FOR YOUR NEXT PERSONAL BEST, A DISCIPLINED APPROACH TO YEAR-END FINANCIAL PLANNING CAN POSITION YOU FOR SUCCESS IN 2025 AND BEYOND.

Whether you’re a seasoned investor or just getting started, this guide will help you fine-tune your financial strategy for the year ahead.

Assess Your Financial Mileage

Before planning for the future, take a moment to reflect on the past year. Just as runners review their splits to identify strengths and weaknesses, you should evaluate your financial progress.

• Review your budget: How well did you stick to your spending plan? Were there unexpected expenses that threw you off course?

• Check your savings: Have you met or exceeded your emergency fund and retirement goals?

• Analyze your investments: Are they aligned with your long-term objectives, or do adjustments need to be made?

Use this time to celebrate your wins while identifying areas for improvement. Remember, every financial decision, like every mile run, contributes to the bigger picture.

Maximize Retirement Contributions

In running, fueling properly ensures peak performance. Similarly, maximizing contributions to retirement accounts is essential for financial health. Before year-end, consider contributing the maximum allowable amount to accounts such as:

• 401(k)s: The 2024 contribution limit is $23,000, with an additional $7,500 catch-up contribution for those aged 50 or older.

• IRAs: You can contribute up to $6,500 ($7,500 for those 50+) for 2024.

Making these contributions not only boosts your future savings but may also reduce your taxable income for the current year. It’s like finding a downhill stretch in a race—an opportunity to gain momentum.

Evaluate Tax Strategies

Tax planning is like choosing the most efficient route during a long run. By navigating opportunities wisely, you can reach your goals with less effort.

• Tax-loss harvesting: If you’ve experienced investment losses this year, consider selling underperforming assets to offset capital gains. This strategy can lower your tax liability while freeing up capital for reinvestment.

• Charitable contributions: Donations to qualifying charities can provide valuable tax deductions. To maximize impact, consider gifting appreciated stocks, which allows you to avoid capital gains taxes while benefiting the organization.

• Flexible spending accounts (FSAs): Ensure you use any remaining FSA funds by the deadline, as many plans have a “use it or lose it” policy.

Consulting with a tax professional can help you fine-tune these strategies and identify additional opportunities tailored to your situation.

Rebalance Your Portfolio

Experienced runners adjust their pace based on terrain and conditions, and you should do the same with your investment portfolio. Over the year, market fluctuations may have shifted your asset allocation. For example:

• If stocks have outperformed, your portfolio might be overweight in equities, exposing you to unnecessary risk.

• If bonds or other defensive assets are underweighted, you may lack the stability needed to weather market volatility.

Rebalancing ensures your portfolio remains aligned with your risk tolerance and long-term goals. It’s a critical step in maintaining financial endurance.

Plan for Charitable Giving

Giving back can be as rewarding as crossing a finish line after months of training. If you’re planning to make donations, year-end is the perfect time to finalize your charitable contributions.

• Donor-advised funds (DAFs): These accounts allow you to contribute now for an immediate tax benefit while deciding later which charities to support.

• Qualified charitable distributions (QCDs): If you’re 70½ or older, you can donate directly from your IRA to a charity, reducing your taxable income.

Charitable giving doesn’t just help others; it also aligns your financial plan with your personal values, adding purpose to your journey.

Fine-Tune Your Financial Goals

The end of the year is an ideal time to revisit your financial goals, just as runners set their sights on new races and personal records.

• Short-term goals: Are you saving for a vacation, home renovation, or other major purchase? Create a realistic timeline and funding strategy.

• Medium-term goals: Plan for milestones like a child’s education or buying a home. Consider investing in a 529 plan or other targeted accounts.

• Long-term goals: Retirement remains the ultimate “marathon” for most people. Ensure your contributions and investment strategies are sufficient to cross the finish line comfortably.

By aligning your financial goals with your values, you’ll stay motivated and focused, even when the road gets tough.

Prepare for 2025 Tax Changes

Tax laws, like race conditions, can change unexpectedly. Familiarize yourself with any updates for 2025, such as new tax brackets or deduction limits.

• Standard deduction: Know how adjustments will affect your filing status.

• Child tax credits: Ensure you’re maximizing available benefits.

• State and local taxes (SALT): If you’re in a high-tax state, explore ways to manage your liability.

Proactively preparing for these changes can save time and stress during tax season, allowing you to focus on more rewarding aspects of your financial plan.

Strengthen Your Financial Habits

Consistency is key in running and financial planning. Establish routines that will carry you through 2025 and beyond:

• Automate savings and investments to build wealth effortlessly.

• Schedule quarterly financial check-ins to track progress and make adjustments.

• Stay informed by reading financial news and attending educational workshops.

Just as consistent training leads to race-day success, disciplined financial habits will help you achieve your goals over time.

Work with a Financial Advisor

Even the most seasoned runners benefit from coaching. A financial advisor can provide expert guidance tailored to your unique situation. From crafting a year-end tax strategy to optimizing your investments, their insights can help you stay on track and avoid costly missteps.

Crossing the Finish Line

Year-end financial planning may seem daunting, but with the right mindset, it’s an opportunity to position yourself for a fantastic 2025. By assessing your progress, maximizing opportunities, and refining your goals, you’ll build the financial endurance needed to achieve all that is meaningful to you and your loved ones.

Just as every mile run brings you closer to the finish line, each financial decision you make sets you up for a brighter future. Lace up, plan well, and prepare to start the new year strong. q

The content is developed from sources believed to provide accurate information. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. Consult with a financial professional regarding your specific situation.

Ari Baum, CFP® is the Founder and CEO of Endurance Wealth Partners, with over 25 years of experience in the Financial Services industry. He brings his in-depth experience to Conceive. Believe. Achieve. for his clients.

Securities and Advisory services offered through Prospera Financial Services Inc. Member FINRA/SIPC. Brokerage and Advisory accounts carried by Wells Fargo Clearing Services, LLC.