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10 financial strategies to keep you on track for year-end

As we approach the end of 2023, opportunities abound for proactive planners. Use this 10-point checklist to keep your financial plan on track.
Couple sitting on couch and looking over finances.With the end of 2023 within view, now’s a good time to review your personal financial plan to help ensure you’re ready to act on opportunities before year-end. The following checklist will guide you through 10 key financial, investment, and balance sheet planning items.

1. Take stock of your portfolio strategy

Broad stock market indices have risen for much of 2023 while the rest of the market has had a more moderate rise. Heading into the final months of the year, all eyes remain on the path of interest rates and their potential impact on the consumer and economy. With that continuing uncertainty as a backdrop, a disciplined investment approach focused on sound long-term targets remains an appropriate strategy to navigate today’s environment.

Review your investment portfolio and ask these questions:

  • Are my current cash reserves adequate? Do I need to adjust my balances?
  • How do my overall portfolio allocations compare to my targets? Are there any rebalancing opportunities to consider?
  • Are there any opportunistic alternative investments that may be appropriate in light of recent market activity? This may include any opportunistic strategies in certain areas of the debt and private equity markets and where they may fit within your broader plan.

A disciplined investment approach focused on sound long-term targets remains an appropriate strategy to navigate today’s environment.

2. Ensure you’re on track to maximize your retirement plan contributions

If you haven’t already checked on the pace of your retirement plan contributions, it’s worth taking a look. Consider these limits when reviewing your contribution levels:

  • 401(k), 403(b), and 457 plan participants can defer up to $22,500 of their wages, with another $7,500 possible for those over 50. Total defined contribution plan limits (including profit sharing, employer contribution, etc.) increased to $66,000.
  • You can contribute up to $6,500 to an IRA and an (unchanged) additional $1,000 for those over age 50.
  • Those with health savings accounts can contribute up to $7,750 (family) or $3,850 (self-only) and another $1,000 for those over age 50.

3. Optimize yield strategies

As highlighted earlier this year during the recent turmoil in regional banks, yields on cash and bonds have increased dramatically over the past year. Savers and investors have much better options today to generate yield without taking much, if any, principal risk. For example, brokerage money market funds are yielding significantly more than checking and savings accounts at traditional banks.

Savers and investors have much better options today to generate yield without taking much, if any, principal risk.

High yields can also entice investors to lean too far into cash relative to what they need in reserve. Keep in mind balancing attractive rates with a sound long-term investment strategy. While cash remains an important part of any investor’s strategy, for funds beyond cash reserve purposes, bonds, stocks, and alternatives may still offer more long-term value.

4. Meet with your tax and financial advisors to identify year-end planning opportunities

Fall is a great time to meet with your advisory team, review 2023 activity, and determine if you should take any action prior to year-end to minimize your tax liabilities.

5. Reaffirm your personal risk management strategy

Review your property and casualty insurance coverages to confirm what’s covered — and what’s not — and determine if any changes are warranted. If you own coastal property, you may be seeing the marketplace changing dramatically in your location. Check with your agent to review your coverages and get in front of any potential surprises at this year’s renewal if it hasn’t already occurred. And don’t forget about your personal umbrella policy; consider whether your limits are adequate and all appropriate assets are listed on the coverage such as ATVs, boats, and rental properties.

6. Check on any education funding changes

Education accounts require regular evaluation as to whether projected balances align with the evolving plans of young beneficiaries. Additionally, the backdrop for college costs continues to change. Many top-tier schools continue to push forward with tuition increases while some other institutions are starting to protect enrollment numbers through cost decreases (published or, more likely, unpublished). Being aware of marketplace dynamics and beneficiary intentions can help you make informed funding decisions. 

Also note that the Secure Act 2.0 introduced a potential new planning opportunity for Section 529 plan owners and beneficiaries. Account holders with excess funds in these accounts may have a new option to help beneficiaries fund Roth IRAs starting in 2024. This is an opportunity to continue monitoring.

7. Review your estate planning documents

Dust off your estate planning documents and confirm whether your crisis plan still meets your wishes. The review should include the “who” of your plan, such as:

  • Who’s named as:
    • Executor and trustee?
    • Financial power of attorney to act on your behalf financially if you can’t?
    • Medical durable power of attorney to make medical decisions for you if you can’t?
  • If you have minor children, who’s named as their guardian and conservator?

If you’re a business owner, confirm that any existing buy/sell agreements remain appropriate in light of current business and ownership dynamics. This review should also include funding considerations.

8. Take advantage of available estate planning opportunities

If one of your priorities involves transferring wealth to manage estate tax exposure, don’t forget the nontaxable “freebies,” including:

  • Annual exclusion gifts, the limit for which is $17,000 per person in 2024.
  • Medical expenses, which can be paid without limitation if you pay the medical provider directly.
  • Education expenses, which can also be paid with no limit if you issue payment to the institution and not an individual.

9. Plan now for sunsetting estate tax exemptions

If your family is considering wealth transfer strategies, you should be actively developing and implementing your plan now as the current estate exemption is scheduled to drop in half in 2026. If you’re considering wealth transfer to minimize future tax bills, timing is important, and you may benefit from doing so sooner rather than later.

This year features yet another large inflation adjustment to the gift tax exemption figure: families that had previously used all their exemption can make additional gifts this year. Check with your advisor.

10. Review your charitable account strategy

Those holding donor-advised funds should check on current balances and determine how much, if any, they want to grant this year. Having a budget in mind helps smooth execution and makes it easier to remember to use these funds throughout the year, as appropriate.

Private foundation (PF) board members may want to revisit investment policy in light of changing forward-looking return expectations in bonds, stocks, and alternatives. PFs that have been more aggressive in recent years to meet return targets in a low-yield environment may have more flexibility going forward than they’ve been accustomed to. These investment policy reviews are also a good opportunity to revisit environmental, social, and governance policies, if desired.

As 2023 evolves, the economy and financial climate continues to be punctuated by uncertainty. Now’s the time to proactively consider the risks — and articulate the opportunities — to help ensure your personal financial plan remains current and effective whatever the future brings.

Past performance does not guarantee future results. All investments include risk and have the potential for loss as well as gain.

Data sources for peer group comparisons, returns, and standard statistical data are provided by the sources referenced and are based on data obtained from recognized statistical services or other sources believed to be reliable. However, some or all of the information has not been verified prior to the analysis, and we do not make any representations as to its accuracy or completeness. Any analysis nonfactual in nature constitutes only current opinions, which are subject to change. Benchmarks or indices are included for information purposes only to reflect the current market environment; no index is a directly tradable investment.

Plante Moran Financial Advisors (PMFA) publishes this update to convey general information about market conditions and not for the purpose of providing investment advice. Investment in any of the companies or sectors mentioned herein may not be appropriate for you. You should consult a representative from PMFA for investment advice regarding your own situation.

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