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What Personal Finance Moves Should I Make Before Year-End?

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  Published in Business and Finance on Thursday, October 23rd 2025 at 6:31 GMT by Wall Street Journal
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Year‑End Personal‑Finance Moves: What Advisors Are Advising Their Clients

As December draws to a close, financial advisors are busy helping clients fine‑tune their portfolios, budgets, and tax strategies. The WSJ article “What Personal Finance Moves Before Year‑End” lays out a practical playbook for the most common actions that can help individuals close the year on a stronger footing. Below is a concise, actionable summary of the key recommendations, along with context and nuances that advisors often discuss with their clients.

1. Max Out Retirement Contributions

401(k) and IRA Limits

• 401(k): 2023 limits are $22,500 for most workers, rising to $30,000 for those 50 or older.
• Roth IRA/Traditional IRA: $6,500, or $7,500 if you’re 50 or older.

Advisors stress the importance of hitting these caps before the cut‑off, especially because the contribution deadlines are on December 31. Even a modest additional contribution can save tens of thousands in taxes over the long run, while also bolstering your retirement nest egg.

Catch‑Up Contributions

For clients who haven’t yet maximized their 401(k) or IRA, advisors recommend “catch‑up” contributions to boost the year’s total and take advantage of the tax‑deferred growth.

2. Capital‑Loss Harvesting

Offset Gains with Losses

Capital‑loss harvesting is a staple in year‑end tax planning. If you have realized gains in a taxable account, selling an investment that’s declined in value can offset those gains and reduce your tax bill. The process can be a little nuanced:

• Realized vs. Unrealized: Only realized gains and losses are taxable, so selling at year‑end triggers the tax impact.
• Wash‑Sale Rule: Avoid buying back the same security within 30 days to prevent a wash‑sale disallowance.

Advisors help clients identify “dead‑weight” positions that can be sold to harvest a loss without damaging long‑term investment strategy.

3. Roth Conversions

When to Convert

Converting a Traditional IRA or 401(k) into a Roth IRA is a powerful tax‑deferral tool, especially if a client expects to be in a higher tax bracket in retirement. Advisors recommend converting before year‑end when:

• Current income is lower (e.g., a part‑time job or sabbatical).
• The client can absorb the conversion tax burden now, avoiding future tax liability.

The article emphasizes that the conversion can be done in stages to avoid bumping the taxpayer into a higher bracket.

4. Charitable Giving

Tax Deductions and Social Impact

A significant number of advisors advise clients to make charitable contributions before the year ends. This can include:

• Direct cash donations to registered charities.
• Donating appreciated assets (like stocks) that would otherwise trigger capital gains.
• Donating to “donor‑advised funds” which allow for a tax deduction now and distribution later.

The WSJ piece highlights that charitable giving not only reduces taxable income but can also help clients align their portfolios with their values.

5. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)

Max Out Medical Savings

For those with high‑deductible health plans, HSAs provide a triple‑tax advantage: contributions are pre‑tax, growth is tax‑free, and withdrawals for qualified medical expenses are tax‑free. The 2023 contribution limits are $3,850 for individuals and $7,750 for families, with an additional $1,000 catch‑up for those 55 and older.

FSAs work similarly for certain expenses but do not roll over year‑to‑year. Advisors suggest:

• Double‑checking the “use‑or‑lose” deadlines.
• Reallocating funds if the client expects higher medical costs in the upcoming year.

6. Rebalancing and Asset Allocation

Keeping the Portfolio on Track

Year‑end is a natural moment for portfolio rebalancing, which realigns asset allocation with an individual’s risk tolerance and long‑term goals. The article stresses:

• Avoiding “panic selling” of assets during market volatility.
• Using automated rebalancing tools if possible to reduce transaction costs.
• Reviewing performance of both the entire portfolio and specific holdings.

Advisors often recommend a disciplined approach, such as setting target percentages and only adjusting when actual allocation deviates beyond a pre‑set threshold (e.g., ±5%).

7. Updating Estate Plans

Wills, Trusts, and Beneficiaries

The piece notes that many people neglect estate planning until a crisis occurs. Year‑end offers a convenient time to:

• Verify that wills are current and reflect any changes in family status.
• Review beneficiary designations on retirement accounts, life insurance, and investment accounts.
• Discuss setting up or updating a trust if the client has significant assets or specific legacy goals.

A well‑maintained estate plan can avoid probate delays and reduce tax liabilities for heirs.

8. Reviewing Education Savings

529 Plans and Coverdell Accounts

If a client has children or grandchildren, it’s wise to:

• Max out contributions to 529 plans (current limits are $15,000 per beneficiary per year for most states).
• Consider “family contribution limits” if the state allows it.
• Adjust asset allocation in these plans to match the projected timeline to school.

The article recommends staying ahead of the tax‑advantaged growth potential, especially if the client plans to use the funds for higher‑education expenses.

9. Preparing for the New Year’s Budget

Goal Setting and Cash Flow Management

Advisors often wrap up the year with a budgeting review to ensure clients are on track for next year’s goals—whether that’s buying a home, taking a sabbatical, or building a rainy‑day fund. Key steps include:

• Comparing projected vs. actual expenses for the year.
• Updating emergency fund targets (recommended 3–6 months of expenses).
• Planning for upcoming large‑ticket purchases (like a car or major home renovation).

A clear budget helps clients avoid last‑minute credit‑card debt spikes and keeps them in control of their financial trajectory.

10. Staying Informed About Tax Code Changes

Legislative Updates

The article also cautions that tax legislation can change with little notice. For example, the Inflation Reduction Act introduced new tax credits for electric vehicles, renewable energy, and health‑care savings. Advisors advise clients to:

• Review how new credits apply to their situation.
• Reassess the timing of purchases or investments that could qualify for those credits.
• Keep an eye on potential changes to standard deduction limits and capital‑gain rates.

Remaining proactive helps clients capture benefits that might otherwise be overlooked.

Practical Takeaway for Clients

1. Check contribution limits and max out retirement accounts.
2. Harvest losses where it makes sense to reduce your tax bill.
3. Consider Roth conversions if your income is lower this year.
4. Make charitable donations to get deductions and support causes you care about.
5. Use HSAs to save on medical expenses.
6. Rebalance your portfolio for risk alignment.
7. Update estate documents to avoid surprises.
8. Maximize education savings if you have kids or grandchildren.
9. Review your budget to ensure you’re on track for next year.
10. Stay alert to tax law changes that could affect your financial plans.

Final Thought

Year‑end is a pivotal period where small, well‑planned moves can significantly impact your financial future. The WSJ article emphasizes that these actions are not merely “nice‑to‑have” but essential components of disciplined personal finance. Working with a financial advisor can help you execute these strategies efficiently, ensuring that you close the year with confidence and set a solid foundation for the next.