End Of Year Retirement Check List – 6 Easy Steps

Updated December 26th, 2022 
Reading Time: 4 minutes
Written by: The Zoe Team

End of year is a good time to tie up loose ends and review financial goals and documents. Follow these 6 easy steps and meet with your financial advisor to review your plans so that you know you’re on track for the coming year.

Does New Years Eve give you low-grade anxiety? Or are you the kind of person who’s had it all planned out since October? Many people will agree that NYE is overrated. People spend a lot of time and money planning the night while others just go out with high expectations. And if the night doesn’t turn out the way you plan, there’s always January 2. With retirement, however, year-end planning is key to making sure you’re on track with your plan, maxing out your savings and taking advantage of strategies to help you get ready for the coming year.

6 Easy Steps to Preparing your End of Year Retirement Checklist

1. Max Out Retirement Plan Contributions 

Be sure to take advantage of any tax-deferred saving that is available to you.  Tax-deferred growth over the long term is one of the most effective ways to save for retirement.

2. Take Your Required Minimum Distribution (RMD)

If you have started taking required minimum distributions, RMDs, note that you must take your annual RMD by the end of this year.  

    • Failure to take the required distribution may result in penalties.  For example, if your RMD is $4000, you could owe the IRS a $2000 penalty for failure to take the correct amount!
    • Note that if you have multiple IRAs, your RMD will be aggregated and you can satisfy the RMD from one or all of the IRA accounts.  Required distributions from employer accounts (like 401(k)s) are calculated for each account and must be taken from the individual account.  If you are still working, note that you will not be required to take your RMD from your employer plan.

3. Keep Track of Important Dates for Social Security and Medicare

    • The earliest you can file for Social Security is age 62, but remember that if you file early, your benefit will be permanently reduced 25-30% depending on your Full Retirement Age (FRA).  
    • You may begin receiving Medicare benefits at age 65 but make sure to sign up for Part A and possibly Part B when you are age 64 and 9 months (even if you’re still working).

4. Consider a Roth Conversion 

A Roth account is a great way to save for the long-term because like a traditional IRA, you get the tax-deferred growth along the way. However, contributions to a Roth IRA or Roth 401(k) are made with after-tax money and qualified distributions will be tax-free.

    • Some people choose to take some or all money from a traditional IRA and convert that amount to a Roth IRA.  Note that any pre-tax money that is converted is subject to income tax in the year of conversion.
    • Creating a Roth account may help you to achieve tax diversification in retirement. This can help you to mitigate and manage taxes well into retirement.
    • Because money that is converted to a Roth is taxable, consider making conversions during low-income tax years, when you are on family leave, on sabbatical, during periods of unemployment or when you go back to school. Some retirees who have not yet begun RMDs may want to consider this strategy to maximize low tax rates early in retirement.
    • Now is a good time to speak to your advisor and tax advisor to determine whether this is a good year for a Roth conversion.

5. Review Wills, Trusts and Beneficiary Designations.

Let’s face it, life happens.  People get divorced, have children, move, buy property, get in huge family feuds!  It’s important to review wills and trusts to make sure these documents are complete and stay up to date with your assets and wishes.  Retirement accounts like IRAs and 401(k)s as well as annuities have beneficiary designations which bypass the terms of wills and trustsThis means that your IRA account will pass to the person you name as beneficiary regardless of what your living trust says. Accounts with beneficiary designations bypass the probate process in most cases, so make sure you still like the people you name as beneficiaries!

End of year is a good time to tie up loose ends and review financial goals and documents.  Meet with your retirement advisor to review your plans so that you know you’re on track for the coming year. And if you don’t yet have a financial advisor, now is a good time to find one!

6. Review Your Financial Plan with Your Advisor  

End of year is a great time to check in with your advisor, not only to review your portfolio and ask questions about the market, but also:

    • To review the goals that you initially set out and determine whether there are any changes. 
    • If you haven’t already, use a retirement calculator to calculate how much you may need to save for retirement and to gauge whether you are on track. If not, talk to your advisor about the appropriate adjustments to saving, spending and investing to get you on the right track.  
    • Now is also a good time to review and rebalance your portfolio, selling winners and reinvesting in promising asset classes. 
    • Year-end is also a good time for last-minute tax-planning; consider talking to your advisor or CPA regarding tax-loss harvesting to offset any capital gains or maxing out deductions for 2023.

Disclosure: This blog is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accounting, tax, legal or financial advisors. The observations of industry trends should not be read as recommendations for stocks or sectors.

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