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Year-End Financial Checklist: 4 Money Moves You Should Prioritize Now

The end of the year is a busy time for most people. Unfortunately, it is usually also the last opportunity to make financial moves that will count towards the current year. If you've been slow to tackle your financial to-do list this year, consider completing your checklist before the end of the year. No matter how eager you are to say goodbye to 2020, it doesn't mean you should leave money on the table.


Put extra savings to work

Often, investors realize they're holding too much cash, but they're just not sure what else to do with the money. If you're a high earner, you may notice your paycheck increased over the year as you exceed the Social Security taxable wage base, $137,700 in 2020. If you're keeping too much cash in the bank (earning next-to-nothing), here are seven ways to put extra cash to work for you:

Ways to use extra savings


  1. Invest excess cash using a brokerage account

  2. Max out contributions to a 401(k), 403(b), or IRA (see 2020 limits). Turned 50 this year or will by December 31st? You're eligible for an additional $6,500 catch-up contribution to a 401(k), 403(b) or $1,000 to an IRA.

  3. Fully fund your emergency cash account

  4. Using the money to pay the tax on a Roth IRA conversion

  5. Refinance your mortgage, especially given historically low interest rates

  6. Pay off (or down) student loans or high-cost debt

  7. Own a business or have a side job? Consider reducing your taxable income while saving for retirement with a SEP IRA or Solo 401(k)


Look at your 401(k) - both old and new

Investors sometimes take set it and forget it too literally. As part of your year-end financial checklist, give your 401(k) some needed attention. Although there aren't any changes to the 401(k) contribution limit in 2021, you should check your current investment choices, allocations, and scheduled contributions.


  • Are you missing the match? Maxing out your 401(k) too early in the year could mean leaving employer matching dollars on the table. Depending on your situation and asset mix, you may also want to consider using an after-tax Roth 401(k) option.

  • How are you invested? Is your account aligned with the investment mix you picked? You may need to rebalance your 401(k) - more on that below. Or perhaps your account has grown significantly and a target-date fund is no longer your best option. If your plan offers a brokerage window, you might be able to expand your offerings.

  • Do something with old retirement plans. After you leave your job, it's easy to forget about an old 401(k) or 403(b). Retirement plans often limit your investment options and make it harder to know where you stand financially. Consider rolling an old 401(k) over to an IRA or weigh the pros and cons of a Roth IRA conversion.

  • Review beneficiary designations. Make sure your elections are current and consider naming contingent beneficiaries.



Diversify or reallocate your investments in a tax-efficient way

The end of the year presents an opportunity for tax-loss harvesting in taxable accounts. In all accounts, rebalancing and diversifying a concentrated position are opportunities. It's usually best to consider these moves together, which is why it's an important part of a year-end financial checklist.


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