Year-End Financial Strategies to Strengthen Your Future

As the year winds to a close, now is the perfect time to focus on strategies that can help you save on taxes, prepare for retirement, and strengthen your overall financial picture. Whether you’re looking to maximize your retirement contributions, improve tax efficiency, or align your giving with your financial goals, a few proactive steps before December 31st can really pay off.

Here are some key strategies to consider:

 

1. Max out your retirement contributions

Contributing as much as possible to your retirement accounts is one of the most tax-efficient ways to build wealth. Here’s what you can contribute for 2025:

• 401(k) Contribution Limit:   $23,500 (plus an additional $7,500 catch-up contribution if you’re over 50).
• Traditional/Roth IRA Limit:   $7,000 (plus an additional $1,000 catch-up contribution if you’re over 50).

If you are eligible, growing your retirement savings while taking advantage of potential tax benefits can help you set a solid foundation for the future.

 

2. Explore Roth conversions

If you expect to be in a lower tax bracket this year, converting funds from a traditional IRA to a Roth IRA could be a smart move. Although taxes are due on the converted amount, Roth IRAs grow tax-free, and withdrawals in retirement can also be tax-free (provided they meet certain requirements).

This strategy isn’t right for everyone, but evaluating it annually with your financial advisor can help you make an informed decision.

 

3. Utilize your Health Savings Account (HSA)

For those with a high-deductible health plan, contributing to an HSA offers outstanding tax benefits:

• HSA limits for 2025:   $4,300 for individuals and $8,550 for families.

HSAs provide what’s often referred to as a triple tax advantage: contributions are tax-deductible, funds grow tax-free, and withdrawals used for qualified medical expenses aren’t taxed. It’s a powerful tool for long-term savings.

 

4. Optimize your charitable giving

Charitable giving can align with your values while helping you reduce your tax burden. Strategies to consider include:

• Bunching donations:   Combine multiple years of donations into one year to maximize your deductions.
• Donor-Advised Funds (DAFs):   Contribute to a DAF and decide which charities to support over time, while benefiting from an immediate tax deduction.
• Qualified Charitable Distributions (QCDs):   If you’re over 70½, you can meet charitable goals by donating directly from your IRA. This can exclude up to $100,000 per year from gross income and, if you’re 73 or older, also satisfy required minimum distributions (RMDs).

Wrap-up the year on solid financial footing

Taking these steps before the year ends can help you feel confident about your financial future. Whether you’d like to fine-tune your strategy for retirement, explore tax-saving opportunities, or discuss charitable giving options, now is the time to act.

Working with a financial professional — and, when applicable, coordinating with your CPA — can ensure you make the best choices for your unique circumstances.