As the year winds down, it’s a perfect time to reflect on your progress and look ahead to what’s next. For those in Gen X nearing retirement, this is more than a time to celebrate the season — it’s an opportunity to set yourself up for the retirement you’ve always envisioned. The choices you make now can have a massive impact on your financial security and the life you want to lead after work.
Retirement planning isn’t just about numbers on a spreadsheet; it’s about using your financial resources to create the life you want to live. Whether you dream of traveling the world, supporting your family, or enjoying the freedom to pursue your passions, this end-of-year guide for Gen X members will help you take meaningful steps toward those goals.
From maximizing your savings and minimizing your tax burden to evaluating your investments and preparing for the unexpected, the right actions today can set the tone for a confident and fulfilling future. Ready to finish the year strong and make sure you stay on track for retirement?
Check Your Retirement Savings Contributions
The end of the year is a great time to make sure you’re maximizing your retirement savings. These contributions don’t just help you prepare for the future — they can also offer significant tax advantages right now. Whether it’s ensuring you’re meeting annual limits, taking advantage of catch-up contributions, or optimizing your employer match, this is your chance to make the most of every dollar you have saved.
Maximize Your Contributions
Retirement accounts like 401(k)s, IRAs, and HSAs come with annual contribution limits that reset at the end of the year. Missing out on these limits is like leaving cash on the table. For 2024, you can contribute up to $23,000 to your 401(k) if you’re under 50, or $30,500 if you qualify for catch-up contributions. IRAs allow contributions up to $7,000 for those over 50, making them another great vehicle to boost your savings.
Health Savings Accounts (HSAs) are another powerful tool if you’re enrolled in a high-deductible health plan, offering a unique retirement tip for managing future healthcare costs. Not only can these accounts help cover future medical expenses, but their triple tax advantage — tax-deductible contributions, tax-deferred growth, and tax-free withdrawals for qualified expenses — makes them a potentially great option for your retirement strategy.
Don’t Leave Employer Contributions on the Table
If your employer offers a match on 401(k) contributions, you want to make sure you take full advantage of this retirement tip. Employer contributions are essentially free money for your retirement — and failing to contribute enough to receive the full match is like turning down part of your paycheck. Before the year ends, confirm that you’ve contributed enough to get every dollar of your match. Even small adjustments can make a big difference over time.
The Power of Catch-Up Contributions
If you’re 50 or older, catch-up contributions can be a game-changer. These additional savings opportunities let you build up your retirement accounts in the years leading up to retirement. Think of them as a way to fast-charge your retirement plan, giving you an extra boost toward your long-term goals.
Reduce Your Taxable Income
Retirement contributions do more than build your nest egg — they can also help reduce your taxable income. Contributions to traditional 401(k)s and IRAs are tax-deductible, lowering the amount you owe this year. HSAs also offer this advantage. By strategically contributing to these accounts, you’re not just planning for retirement; you’re also creating immediate tax relief.
Work with Your Financial Planner
Maximizing your retirement savings isn’t just about hitting the right numbers, it’s about ensuring those contributions align with your broader financial goals. A CERTIFIED FINANCIAL PLANNER® can help you evaluate where to direct your savings, explore advanced strategies like Roth conversions, and make the most of every available tax-advantaged opportunity.
Taking the time now to optimize your retirement contributions will set you up for a better financial future. By making intentional decisions before the year ends, you’re not only reducing tax liabilities but also making sure your savings work harder for the retirement you have worked to earn.
Review Your Portfolio
For those focused on their Gen X retirement, it’s especially important at the end of the year to take a step back and understand how your investments are performing and whether they’re still aligned with your long-term goals. This process isn’t just about checking out the numbers, but about making sure your portfolio reflects your risk tolerance, time horizon, and the lifestyle you envision in retirement.
Rebalancing
Throughout the year, market fluctuations can shift the balance of your portfolio. For example, if certain stocks have performed well, they may now make up a larger percentage of your investments, exposing you to more risk than you intended. Rebalancing allows you to realign your portfolio by selling assets that have grown disproportionately and reinvesting in areas that may need more attention.
We want to remind you that this process isn’t about timing the market; it’s about staying disciplined and ensuring your investments stay in harmony with your financial plan. Think of rebalancing as a routine checkup — one that keeps your portfolio healthy and on track for retirement.
Tax-Loss Harvesting
Market downturns can be frustrating, but they also come with opportunities. Tax-loss harvesting is a powerful strategy that allows you to sell underperforming investments and use those losses to offset capital gains from other assets. This reduces your taxable income and can help you manage your overall tax liability for the year.
For example, if you sold a stock that performed exceptionally well this year, selling an underperforming asset could help you balance the tax impact. You can then reinvest the proceeds into other opportunities that better align with your goals. Be mindful, however, of IRS rules like the wash-sale rule, which prevents you from repurchasing a similar investment within 30 days.
Diversification
Diversification is the cornerstone of every resilient investment strategy. By spreading your investments across asset classes, industries, and geographic regions, you reduce the impact of any single downturn. This is especially critical as you near retirement and have less time to recover from market volatility.
Ask yourself: Is your portfolio well-balanced between growth-oriented investments and more stable, income-generating assets? Are you overly concentrated in any single stock or sector? These questions can help you decide whether your portfolio is equipped to support you through the ups and downs of a balanced retirement.
Stay Focused on Your Goals
It’s easy to get caught up in short-term market movements, but your portfolio should always reflect your long-term priorities. Whether you’re aiming to generate income, preserve capital, or fund your specific retirement dreams like travel or supporting family, your investments should align with your vision.
Reviewing your portfolio at year-end is about making adjustments, staying intentional, and ensuring every decision supports the retirement you’ve worked so hard to achieve.
Evaluate Your Health and Insurance Needs
As you approach retirement, making sure you have the right health and insurance coverage is an essential part of protecting your financial security — and your peace of mind. The end of the year is the perfect time to review your current plans, address any gaps, and prepare for future healthcare needs.
Health Insurance
Healthcare is one of the most significant expenses retirees face, so understanding your options now can prevent surprises later. If you’re still working, you may want to review your employer-sponsored health plan and compare it to other available options, such as coverage through a spouse’s plan or a private policy.
If you’re nearing 65, perhaps it’s time to start thinking about Medicare. Consider which parts of Medicare — such as Parts A, B, and D — you’ll need and whether supplemental insurance might be right for you. Planning ahead helps to ensure a smooth transition to coverage when the time comes and helps avoid costly penalties for late enrollment.
Long-Term Care Planning
No one likes to think about needing long-term care, but the reality is that many retirees will require assistance at some point. Long-term care insurance can help cover expenses for nursing homes, assisted living facilities, or in-home care — costs that can otherwise quickly deplete your savings.
If you don’t already have long-term care coverage, now is a good time to explore your options. The earlier you purchase a policy, the more affordable it tends to be. Discuss any retirement questions with your financial planner to understand how long-term care fits into your overall retirement strategy and whether alternative options, like hybrid life insurance policies with long-term care riders, might make sense for you.
Life and Disability Insurance
As you work towards retirement, your life and disability insurance needs may change. If you’ve paid off significant debts, such as a mortgage, or your children are financially independent, you might need less life insurance coverage than before. However, if you still have financial obligations or want to leave a legacy for your loved ones, maintaining or adjusting your policy could be important.
Disability insurance, on the other hand, may be less critical as you transition out of the workforce, but if you’re still working and depend on your income, ensure your coverage is sufficient to protect against unexpected loss.
Evaluating health and insurance needs is a complex process, but it doesn’t have to be overwhelming. A financial planner can help you identify gaps in your coverage, explore cost-effective options, and integrate your insurance planning into your broader retirement goals.
By addressing these important areas now, you’re not only protecting your finances but also ensuring your retirement years are secure and stress-free. With proactive planning, you’ll be ready to face whatever the future holds with confidence.
Address Tax Planning Before the Deadline
While the end of the year may seem like it’s about wrapping up holiday plans, it’s also a critical time to address your tax strategy. By taking thoughtful, proactive steps now, you can reduce your tax liability, meet important deadlines, and set yourself up for greater financial flexibility in retirement.
Required Minimum Distributions (RMDs)
If you’re 73 or older (or will be by the end of the year), you’re required to take RMDs from certain retirement accounts, such as traditional IRAs and 401(k)s. Failing to take your RMDs on time can result in a steep penalty — up to 25% of the amount you were supposed to withdraw.
Even if you don’t rely on these distributions for income, they’re a mandatory part of your retirement plan. It may be worth consulting with your financial planner to answer any retirement questions, ensure you’re withdrawing the correct amount, and avoid unnecessary penalties. For those nearing the RMD age, consider strategies like Roth conversions to minimize future tax obligations.
Charitable Giving
Year-end is a great time to align your tax strategy with your personal values through charitable giving. Qualified Charitable Distributions (QCDs) allow individuals aged 70½ or older to donate up to $100,000 annually from their IRAs directly to a qualified charity. The bonus? These distributions count toward your RMDs and aren’t considered taxable income.
For those who want to make a bigger impact or plan for future giving, donor-advised funds (DAFs) provide a flexible option. Contributions to a DAF are tax-deductible in the year they’re made, allowing you to claim the deduction now and distribute funds to charities over time.
Tax-Efficient Withdrawals
Where you withdraw funds from during retirement matters. A strategic withdrawal plan can help you minimize taxes and preserve your wealth for longer. To make the most of your withdrawals:
- Withdraw from taxable accounts first to take advantage of lower capital gains rates.
- Use tax-deferred accounts next, balancing withdrawals with your current tax bracket.
- Save Roth accounts for last, as withdrawals are tax-free and can grow indefinitely.
This order isn’t one-size-fits-all, but your financial planner can help you design a withdrawal strategy that is tailored to your unique situation to help you keep more of your hard-earned savings.
Tax planning is intricate, so it’s best to work with a professional who can provide clarity and make sure you meet all year-end deadlines while exploring opportunities to reduce your tax burden. Whether it’s optimizing your withdrawal strategy or making the most of charitable giving, professional guidance can make all the difference.
By addressing tax planning now, you’re protecting your wealth and paving the way for a smoother financial future. Take these steps before the deadline so that you can enter the new year with confidence and peace of mind in your financial plan.
Start the New Year with Confidence
As we get closer to the end of the year, taking the time to review your financial plan can be a meaningful step toward securing the retirement you’ve worked so hard to achieve. From maximizing your retirement savings and rebalancing your investment portfolio to evaluating your health and insurance needs and tackling year-end tax planning, each of these actions plays a vital role in ensuring your financial well-being.
By addressing these key areas, you’re proactively creating a roadmap that aligns with your goals and values. The best way to tie it all together? Schedule a year-end meeting with your trusted financial planner. Having the right professional can help you refine your strategies, find opportunities you might have missed, and provide the guidance you need to move into the new year with confidence.
This is your opportunity to ensure you’re on track to reach your goals — not just for the year but for the retirement you’ve always envisioned. Don’t let this year-end chance pass by. Take the time now to make the most of your financial future, and step into the new year ready to achieve your goals.
