Urgent Year-End Checklist for Retirees: Key Financial Steps Now

UPDATE: Retirees are urged to take immediate action as the year draws to a close, with essential financial planning tasks needing attention before December 31, 2025. With the clock ticking, this is a critical time to reassess your financial health and ensure your portfolio is aligned with your retirement goals.

As retirees reflect on their financial strategies, reviewing your portfolio spending rate is paramount. Experts advise calculating your withdrawal rate by dividing your portfolio balance by your projected spending for the year, including taxes. The widely accepted 4% guideline is a good baseline, especially for those newly retired, but many can safely consider withdrawing up to 7% if they have a shorter spending horizon.

Healthcare coverage is another pressing issue. The Medicare open enrollment period is currently active and will close on December 7. Retirees should evaluate their prescription drug coverage and Medicare Advantage plans to ensure they are making the best choices for their healthcare needs.

Next, it’s crucial to assess your portfolio’s asset allocation. Utilizing Morningstar’s X-Ray functionality, retirees can compare their current allocations against targets. Many portfolios have seen significant growth in US stocks, meaning it may be time to trim these holdings. These funds could be redirected to less-performing assets or used to meet required minimum distributions (RMDs).

If you are 73 years old or older, you must take RMDs by the end of the year. This deadline is an excellent opportunity to clean up your portfolio by selling off underperforming assets or stocks you no longer monitor closely.

Additionally, now is the time to ensure that you have adequate liquid reserves for the upcoming year. Experts recommend maintaining a cash cushion that covers at least six months of withdrawals, which could help avoid selling long-term investments during market downturns.

Charitable giving is also a significant consideration as the year-end approaches. Retirees over age 70½ can utilize qualified charitable distributions (QCDs) to donate up to $108,000 from their IRAs without incurring tax liabilities. This strategy not only benefits charities but also satisfies RMD requirements.

On the tax front, while stock performance has been strong, retirees should still consider tax-loss selling where applicable. While this may not be as advantageous as in previous years, retirees holding individual stocks can offset capital gains by selling losing positions.

These steps are not just financial maneuvers; they represent a crucial opportunity to secure a stable retirement. By addressing these areas now, retirees can enhance their financial wellbeing and enter the new year with confidence.

Don’t wait—take action on these key financial strategies today to ensure your retirement remains secure. Share this urgent checklist with fellow retirees who need to hear this vital information before the year ends!