Year-End Retirement Planning Checklist: What to Do Before 2025

As the year draws to a close, it’s the perfect time to evaluate your retirement planning and ensure you’re on track to meet your financial goals. Year-end is a critical time for making contributions, adjusting investments, and taking advantage of tax-saving opportunities. With 2025 just around the corner, here’s a checklist of what you need to do to prepare for a secure and prosperous retirement.

1. Max Out Retirement Contributions

One of the most effective ways to boost your retirement savings is by maxing out your contributions to tax-advantaged accounts like your 401(k) or IRA. The IRS sets annual contribution limits, and if you haven’t reached those limits, now is the time to contribute more before the year ends.

Contribution Limits for 2024:

• 401(k), 403(b), or 457 plans: Up to $23,000 (or $30,500 if you’re age 50 or older).
• Traditional or Roth IRA: Up to $7,000 (or $8,000 if you’re 50+).

If you haven’t yet reached these limits, consider making additional contributions to take full advantage of your tax-deferred or tax-free retirement savings.

2. Take Advantage of Employer Matching Contributions

If your employer offers a 401(k) matching program, make sure you’re contributing enough to get the full match. Employer matches are essentially “free money” added to your retirement savings, and failing to take advantage of the full match is leaving potential savings on the table.

For example, if your employer offers a 50% match on contributions up to 6% of your salary, ensure that you are contributing at least 6% to your 401(k) plan before the year ends.

3. Consider a Roth Conversion

If you have a traditional IRA and expect your tax rate to increase in the future, you might want to consider converting some or all of your traditional IRA funds to a Roth IRA. A Roth conversion allows you to pay taxes on your contributions now, in exchange for tax-free withdrawals in retirement.

This can be especially beneficial if you expect to be in a higher tax bracket later in life. Converting in a year when your income is lower could reduce your overall tax burden.

Steps to Take:

• Speak to a tax advisor to determine if a Roth conversion makes sense for you.
• Consider converting only a portion of your IRA to avoid a large tax bill.

4. Make Catch-Up Contributions (If Eligible)

If you’re age 50 or older, the IRS allows you to make catch-up contributions to retirement accounts to help boost your savings in the final stretch toward retirement. These catch-up contributions allow you to save beyond the regular contribution limits.

Catch-Up Contribution Limits for 2024:

• 401(k), 403(b), or 457 plans: An additional $7,500 (bringing the total contribution limit to $30,500).
• Traditional or Roth IRA: An additional $1,000 (bringing the total contribution limit to $8,000).

If you’re not yet maximizing these contributions, now is a great time to do so and boost your retirement savings before year-end.

5. Rebalance Your Investment Portfolio

Year-end is an excellent time to rebalance your retirement portfolio to ensure that it aligns with your goals and risk tolerance. Over time, market fluctuations can cause your asset allocation to drift from its target, potentially exposing you to more risk than you intended.

How to Rebalance:

• Review your current portfolio to check if it’s still aligned with your target allocation (e.g., 60% stocks, 40% bonds).
• Sell investments that have grown too large a portion of your portfolio and reinvest in areas that have lagged behind.
• If you’re nearing retirement, consider gradually shifting more of your portfolio into conservative investments like bonds or cash.

Rebalancing at year-end helps you maintain the right balance of risk and return as you move closer to retirement.

6. Take Required Minimum Distributions (RMDs)

If you’re age 73 or older, you’re required to take Required Minimum Distributions (RMDs) from your traditional IRA, 401(k), or other tax-deferred retirement accounts. Failing to take your RMD by December 31 can result in a hefty penalty: 50% of the amount not withdrawn.

Steps to Take:

• Determine your RMD amount for the year based on the IRS life expectancy tables and the balance of your accounts as of December 31 of the previous year.
• Withdraw the appropriate amount from your tax-deferred retirement accounts before December 31 to avoid penalties.

If you don’t need your RMD for living expenses, consider reinvesting it in a taxable brokerage account.

7. Review Your Tax Situation

Year-end is an important time to assess your overall tax situation and make adjustments to optimize your tax liability. Taking a proactive approach to taxes can help you avoid surprises when filing your return in April.

Key Tax Considerations:

• Tax-loss harvesting: If you’ve incurred losses in your taxable investment accounts, consider selling those assets before year-end to offset any capital gains and reduce your tax bill.
• Charitable contributions: If you’re feeling charitable, consider making donations to qualified organizations. You may be able to deduct those contributions if you itemize your deductions.
• Tax deductions: Ensure you’re taking full advantage of any retirement-related tax deductions, such as deductions for traditional IRA contributions or self-employed retirement plan contributions.

8. Evaluate Health Savings Account (HSA) Contributions

If you have a Health Savings Account (HSA), make sure you’re maximizing your contributions for the year. HSAs are triple tax-advantaged, meaning contributions are tax-deductible, funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free.

HSA Contribution Limits for 2024:

• $4,150 for individuals.
• $8,300 for families.
• Catch-up contribution: An additional $1,000 if you’re age 55 or older.

HSAs are a great way to save for healthcare costs in retirement while enjoying significant tax benefits.

9. Consider Long-Term Care and Insurance Needs

As you approach retirement, it’s essential to consider your long-term care needs and whether you’re adequately insured. Long-term care can be expensive, and without proper planning, it could drain your retirement savings.

What to Consider:

• Long-term care insurance: If you don’t already have long-term care insurance, consider whether it’s a good option for protecting your assets in case you need extended care.
• Review life insurance: If you have a life insurance policy, review the coverage amount and make sure it still aligns with your needs, especially if your financial situation has changed.
• Disability insurance: If you’re still working, ensure you have disability insurance coverage to protect your income in case you’re unable to work due to illness or injury.

10. Update Your Estate Plan and Beneficiaries

Year-end is a great time to review your estate plan and ensure everything is up-to-date. This includes your will, living will, powers of attorney, and beneficiary designations on your retirement accounts.

What to Review:

• Beneficiary designations: Make sure the beneficiaries listed on your retirement accounts, life insurance policies, and other financial accounts are current. Life changes such as marriage, divorce, or the birth of a child may necessitate updates.
• Update your will: If you’ve had significant life changes, ensure your will reflects your current wishes regarding the distribution of your assets.
• Consider a trust: If your estate is large or complex, you may want to consider establishing a trust to manage the distribution of your assets in a tax-efficient manner.

11. Reassess Retirement Goals and Timeline

Finally, year-end is the perfect time to reassess your retirement goals and make sure you’re still on track to retire when and how you want. Life changes, such as changes in your income, health, or family situation, can impact your retirement plans, so it’s important to review your progress regularly.

What to Evaluate:

• Retirement timeline: Are you still on track to retire at your desired age, or do you need to adjust your timeline based on current savings and financial needs?
• Savings goals: Reassess whether you’re saving enough to meet your retirement goals. If you’re falling behind, consider increasing your contributions or adjusting your investment strategy.
• Post-retirement budget: Review your anticipated retirement expenses and ensure they align with your expected income from retirement accounts, Social Security, and other sources.

Final Thoughts

As 2024 comes to a close, taking time to review your retirement planning can set you up for success in the coming years. By maximizing contributions, rebalancing your investments, and staying on top of important tax considerations, you’ll be well-prepared for a comfortable retirement.

Following this year-end checklist will help you stay on track with your retirement goals and ensure that 2025—and the years that follow—are financially secure and rewarding.