It’s the time of year when we spend hours raking leaves and almost as much time monitoring our neighbors’ cleanup progress — or lack thereof.
Fall cleanup is not a fun task, but it’s one you will benefit from once it’s done. We encourage clients to take a similar approach to their finances. Check these boxes off your financial to-do list now and be better off for it.
Revisit your target allocation
Every investor should have a formal target allocation, and you should base it on more than just your age. When markets become volatile, let your target allocation guide you. If 80% equities is the target, but your current investments are closer to 85%, rebalance. Also pay attention to U.S. vs. international and small-cap vs. large-cap exposure. If you take monthly withdrawals, your allocation might have shifted quicker than expected. Be mindful of where you stand and construct a plan for returning to target.
Initiate tax loss harvesting
Another strong year for the benchmarks hardly means there are no losses to harvest. Deciding whether to sell depends upon your situation. This is always a balance between tax benefits and investment strategy. But at the very least, identify holdings with sizable unrealized losses in your taxable accounts, and determine if you still have conviction in their risk/reward characteristics. If not, selling could help reduce your 2025 tax bill.
Maximize retirement contributions
Pre-tax contributions into employer plans lower your taxable income dollar-for-dollar. As the year comes to an end, review how much you’ve put in. For anyone under age 50, the 401(k) and 403(b) maximum is $23,500 in 2025. Those 50-59 or older than 64 can contribute an additional $7,500 (meaning $31,000 total). If you are 60-63, the maximum is even higher: $34,750 total.
Consider Roth IRA conversions
Not everyone will benefit from Roth IRA conversions, but you should be crunching the numbers to know for sure. The “sweet spot” tends to be after retirement but before you are subject to Required Minimum Distributions (RMDs), typically at age 73. And the lower your tax bracket, the better the chance these will work in your favor. This is also a great opportunity for your accountant to coordinate with your investment adviser, something that often leads to better overall decisions.
Donate to charitable organizations
Highly appreciated assets
Do you own a technology stock that has outperformed your wildest dreams, but you don’t want to sell because of taxes? Consider gifting shares to your favorite charity. In most cases, you will be able to deduct the fair market value from your taxable income and avoid paying capital gains taxes.
