Year-End Financial Power Moves For Women

As the year comes to a close, the hustle and bustle can make it easy to forget about year-end financial planning. However, a strategic approach can do wonders for your financial health, especially when you consider some lesser-known moves that your financial advisor might recommend. Here are impactful, often overlooked year-end financial power moves that women can take advantage of to end the year strong and start the next on a solid financial foundation.

1. Rethink Charitable Giving with a Donor-Advised Fund

Many women are committed to philanthropy, whether supporting local charities or larger foundations. While direct donations are always valuable, you may want to consider setting up a donor-advised fund (DAF) if you haven’t already. This allows you to make a large charitable contribution, take an immediate tax deduction and distribute funds to charities over time. It’s a powerful way to maximize giving without rushing last-minute decisions.

Pro Tip: A DAF can also be a strategic tool for teaching younger family members about the importance of giving by involving them in choosing charities.

2. Perform a Roth IRA Conversion

If you’ve had a year where your income dipped—perhaps due to a career shift or retirement planning—converting a portion of a traditional IRA to a Roth IRA can potentially be an advantageous move. While you’ll pay taxes on the amount converted, your future withdrawals will be tax-free, providing flexibility and potential tax savings down the line.

Pro Tip: Timing is crucial, so check in with your financial professional as soon as possible to determine if a conversion makes sense for your specific tax situation.

3. Take Advantage of Tax-Loss Harvesting

If your portfolio has investments that didn’t perform as expected this year, you can still potentially use them to your advantage. By selling these underperforming assets, you can potentially offset capital gains from winning investments, lowering your taxable income. This lesser-known strategy can help manage tax liability while realigning your investment portfolio for the year ahead.

Pro Tip: Talk with your financial advisor about reinvesting in similar assets to maintain your overall portfolio strategy while adhering to the IRS’s “wash sale” rule.

4. Optimize Your Health Savings Account (HSA) Contributions

Many women underestimate the power of a Health Savings Account (HSA). This triple-tax-advantaged account allows contributions to go in pre-tax, grow tax-free and be withdrawn tax-free for qualified medical expenses. If you haven’t maxed out your contributions for the year, consider doing so before December 31.

Pro Tip: HSAs can also function as a backup retirement account. Once you turn 65, you can use your HSA funds for non-medical expenses without a penalty (though non-medical withdrawals will be taxed as income).

5. Review Your Flexible Spending Account (FSA) Balance

While HSAs roll over year after year, FSAs typically don’t. If you have money left in your FSA, make sure to use it before the deadline to avoid losing those funds. This is the perfect opportunity to schedule appointments, stock up on prescription eyewear or purchase qualifying medical supplies.

Pro Tip: Some FSAs offer a grace period or allow you to roll over a small portion of your funds, so check the specifics of your plan.

6. Revisit Your Estate Plan & Beneficiary Designations

Year-end is an ideal time to review your estate planning documents, especially if there have been changes in your life, such as a new grandchild or a divorce. Make sure your will, healthcare proxy and power of attorney are up to date. Reviewing beneficiary designations on retirement accounts and insurance policies is equally crucial, as these override what’s in your will.

Pro Tip: A common oversight is not updating beneficiaries after major life events, which could result in unintended consequences.

7. Explore Gifting Strategies for Wealth Transfer

If passing wealth to family members is one of your goals, consider making tax-free gifts. In 2024, you can gift up to $17,000 per individual without triggering gift tax consequences. This can be a strategic move to reduce your estate's value while providing financial support to loved ones.

Pro Tip: If you’re helping fund a grandchild’s education, consider contributing directly to a 529 plan, which grows tax-free and can be used for qualified educational expenses.

8. Check Your Credit Report for Year-End Accuracy

Ensuring your credit report is accurate is a move that often goes overlooked. An annual check allows you to catch and dispute any inaccuracies that could affect your credit score. It’s also a good opportunity to review your credit utilization and strategize how to reduce any outstanding balances.

Pro Tip: The end of the year is a great time to map out debt repayment plans for the new year with a focus on high-interest accounts first.

These year-end financial power moves and pro tips can help you stay ahead of the curve and strengthen your financial position. From leveraging lesser-known investment strategies to double-checking that your financial documents are current, these steps can set the tone for a financially sound new year.

And remember, your financial advisor is your best ally for navigating these advanced strategies and making decisions tailored to your unique situation. So make sure to check in with them to include them in this process and ask what other recommendations they have for you and your unique financial situation.

If you don’t have a financial advisor or would like a second opinion, I would be more than happy to help.

Please Note: Any opinions are those of Lauren Smith and not necessarily those Raymond James Financial Services, Inc., or of Raymond James.  There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.  Investing involves risk and you may incur a profit or loss regardless of strategy selected. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax issues, these matters should be discussed with the appropriate professional. Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact us. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.