Financial Strategies to Consider Before Year End

Dec 21, 2022 | Financial Planning, Getting Started

As 2022 comes to a close, here are some things to think about before year-end. The end of a calendar year is a good time to meet with your wealth advisor to review your overall financial plan, discuss any changes to your individual circumstances, and implement any available tax strategies. If you don’t have a wealth advisor, now is a great time to begin a conversation so that you can begin 2023 with the confidence that comes with a solid financial plan designed to help you reach your goals. 

Review your asset allocation & rebalance accordingly. 

Remember to revisit your asset allocation, which is the percentage mix of stocks, bonds, and other asset types in your portfolio, to make sure it is in line with your investment objectives, risk tolerance, time horizon, income needs, and ability, both financially and emotionally, to weather volatility. Market fluctuations throughout the year can result in your asset allocation drifting from target parameters, so year-end is a good time to rebalance your portfolio and bring it back in line with your target mix of investments. Your wealth advisor can also employ a technique called tax-loss harvesting when rebalancing. For clients using a wealth advisor who has discretion over client accounts, tax loss harvesting strategies will likely be implemented by the wealth advisor using their judgment about what is best for clients.

Plan for your taxes. 

While you can’t control income taxes, there are strategies that can be employed on your investment accounts to help minimize the taxes owed on income generated from investments and capital gains taxes. Tax-aware investment strategies seek to optimize after tax-returns by taking into consideration how different types of accounts are taxed. As mentioned above, tax loss harvesting is a strategy that can be employed in taxable accounts to reduce capital gains taxes by offsetting long-term gains with losses by selling assets that have lost value. While tax loss harvesting can reduce your capital gains taxes, it should be coordinated with a broader tax strategy and your overall financial plan. Additionally, to avoid excess capital gains taxes in future years when securities are sold, you might seek to generate a specific amount of capital gains on a yearly basis by rebalancing your portfolio with this goal in mind. 

Update your estate plan. 

Update your estate plan to ensure it still reflects how you want your assets distributed to heirs upon your death, which also means reflecting on how the past year has impacted your family and updating beneficiaries if births or deaths have resulted in needed changes. Those planning to give financial gifts to family members because they want to share some of their assets in life, and not only after death, should keep in mind the annual gift tax exclusion limit is $16,000 for 2022 ($32,000 for couples) and make those gifts before year-end.

Review your retirement contributions and make catch up contributions if in your best interest. 

If you’re contributing to an employer-sponsored retirement plan, such as a 401(k), review your year-to-date contributions to make sure 1) you have fully funded your accounts for the year and 2) you have taken advantage of any employer matching since you could be leaving free money on the table. In 2022, you can save up to $20,500 through your 401(k) plan. For those age 50 and older, you can make up to an additional $6,500 catch-up contribution. Furthermore, you might want to consider opening an individual retirement account (IRA) if you don’t have one and maximizing contributions to IRAs. The 2022 tax year allows you to contribute up to $6,000 to an IRA plus an additional $1,000 if you are age 50 or older. Lastly, Roth IRAs are a good option for those that meet income eligibility requirements (one has to make below a specified Adjusted Gross Income (AGI) to participate). Just like with Traditional IRAs, you may contribute up to $6,000 to a Roth IRA plus an additional $1,000 if you are age 50 or older in 2022.  A Roth IRA allows you to make after-tax contributions and is best suited for an individual who expects to be in a higher tax bracket when he or she starts taking withdrawals, whereas a Traditional IRA allows you to make pre-tax contributions and is generally best suited for an individual who expects to be in the same or lower tax bracket when he or she starts taking withdrawals. In short, a Roth IRA allows you to benefit from tax-free withdrawals in the future, while a Traditional IRA allows you to take advantage of tax benefits today.

Consider the impact of any unexpected or milestone events in life and the likelihood of any happening in the near future.

It is important to always be aware of how the things happening in your life might influence your financial situation and needs in the future.  As you experience life events or approach milestones, revisiting your financial plan with a wealth advisor is imperative because they might dictate changes to your financial plan and investment strategy. For example, if you’ve recently retired or are considering retirement, this would dramatically change your life circumstances because your primary source of income will go away, and you’ll likely need to start drawing on retirement accounts for income to fund your spending at some point in the near future. This requires putting an income plan in place and ensuring your asset allocation is more conservative because, for most, preserving capital becomes more important at this stage in life than growth.  Similarly, if you or a spouse is diagnosed with an illness that might require long-term care then you’ll need to put a strategy in place that ensures you allocate enough of your retirement savings to cover these costs if you don’t have insurance coverage for these types of events. On a more positive note, if you were to win the lottery or receive an unexpected inheritance from a long, lost relative then you’d want to consider how coming into this money changes your overall financial plan – will you donate it to charity, will you retire, will you set up trusts for future generations, will you start a new business? Don’t underestimate the impact that life can have on your financial plan and communicate changes, however seemingly unimportant, with your advisor to make sure your life situation and circumstances are incorporated appropriately into a comprehensive and holistic approach to pursuing your financial goals.

GreenUp Wealth Management is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.


  • Dennis Goodwin, CMFC®

    Vice President | Wealth Advisor | Kansas City -- Dennis helps clients understand the importance of their financial future and create possibilities through planning and professional advice. Dennis is a Vice President, Wealth Advisor, at Greenup Wealth and brings over two and half decades of financial services experience to the firm. Prior to joining Greenup, Dennis spent eight years as an advisor with one of the largest RIA firms in Kansas City. Dennis’ prior experience within the financial services sector as a sales manager, operations manager, and learning and development specialist, have provided him a great deal of knowledge and experience which he brings to bear in each of his client relationships.

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