When it comes to the end of the year, it's crucial to focus on financial planning. This series aims to provide you with the necessary tools and strategies to make the most of this time. In this fourth part, we'll explore six steps to ensure a secure financial future.

Secure Your Retirement with Year-End Financial Planning

Step 1: Maximize Your Retirement Contributions

Retirement planning is a long-term commitment, and the end of the year presents a great opportunity to catch up on contributions. According to a recent report, only a small percentage of plan participants are maxing out their 401(k) or IRA. You might consider using a bonus to boost your retirement savings. By making additional contributions, you can lower your taxable income (in the case of a traditional IRA) and increase the potential for tax-free income in retirement (with a Roth IRA). For 2024, the 401(k) contribution limit is $23,000 for those under 50, and an additional $7,500 in catch-up contributions is available for those over 50. The IRA contribution limit is $7,000, with a $1,000 catch-up contribution for individuals over 50. Maxing out your employer plan contributions by December 31 ensures you take full advantage of these tax benefits. Remember, your 2024 IRA contributions can be made up until April 15, 2025. While "maxing out" may not be feasible for everyone, every little bit counts. As you near the end of the accumulation stage, you'll realize how even a small effort today can have a significant impact tomorrow. Incorporate that "little more" into your plan.

Step 2: Evaluate Your Investment Strategy

Now is the perfect time to review your retirement portfolio. Ensure that it aligns with your retirement goals and that your asset allocation is appropriate given your age and risk tolerance. The stock market has been volatile this year, but over the past couple of years, there has been substantial growth. Without making any adjustments, you might find yourself in a riskier position than you're comfortable with. Consider rebalancing your portfolio to bring it back in line with your long-term strategy and appetite. Aligning your investment approach with the time frame of your goals is essential. If you haven't conducted a portfolio maintenance review, now is the time to do so.

Step 3: Consider a Roth Conversion

If your income was lower than expected this year or you anticipate paying more taxes in the future, a Roth conversion could be a smart move. By converting traditional retirement funds into a Roth, you pay taxes now in exchange for the potential of tax-free withdrawals in retirement. This strategy is particularly useful when you expect to be in a lower tax bracket. Take a look at your current tax bracket and consider if there is room for additional income. Work with your tax adviser to develop a conversion strategy that suits your current and future needs.

Step 4: Check Your Beneficiaries

While reviewing your retirement accounts, it's essential to double-check the beneficiaries listed on your 401(k), IRAs, and any life insurance policies. Life changes such as marriage, divorce, or the birth of a child can require updates to these designations. Keeping your beneficiaries current ensures that your assets go to the intended recipients after you're gone. Remember, a beneficiary designation on a retirement account or insurance policy takes precedence over any instructions in your will. This step is crucial in ensuring the synchronization of your financial plans.

Step 5: Map Out Your Savings Plan for 2025

The new year is just around the corner, and it could bring a pay raise or promotion. You might also pay off a car loan in 2025. Capture a portion of that "new income" to boost your savings. Proactively plan how and where you will contribute to retirement savings next year. Be deliberate in your approach and make sure you're on track to meet your long-term goals.

Step 6: Make it a Family Affair

Even if you or your spouse doesn't work outside the home, there are still retirement savings opportunities. A spousal IRA or Roth IRA can be a great option. Contributions to a non-retirement account, such as a jointly owned brokerage account earmarked for retirement, can help build a future for both of you. Use this year-end evaluation as an opportunity to discuss and align your retirement goals and portfolio with your spouse.Other parts in the series:Get the Latest Financial TipsWhether you're trying to balance your budget, build up your credit, select a good life insurance program, or are gearing up for a home purchase, Military.com has you covered. Subscribe to Military.com and get the latest military benefit updates and tips delivered straight to your inbox.