Bruce Helmer and Peg Webb

Wealth doesn’t just happen — it’s built by those willing to invest in the details. With year-end fast approaching, now is the perfect time to ensure your money is working as hard as you do. In today’s landscape, marked by political and economic shifts, planning with care and precision is more critical than ever.

Navigating tax policy uncertainty

As we look ahead to 2025, potential tax policy changes under the incoming administration loom large. President-elect Donald Trump has signaled his intention to extend expiring tax cuts, potentially eliminate taxes on Social Security benefits, and make other adjustments. However, implementing these changes requires navigating a divided Congress. Plus, U.S. debt-service costs now exceed defense spending, which is straining global fixed-income markets and adding to the uncertainty.

Tax-smart strategies to consider

What does this mean for you? It’s time to stress-test your financial plan. Deferring income to next year, for instance, might allow you to benefit from anticipated tax cuts. Such strategies, however, require careful coordination to align with your long-term goals.

• Capital Gains and Loss Harvesting: Tax-loss harvesting is an often-overlooked opportunity to minimize tax liability. Selling investments at a loss to offset gains elsewhere can reduce your taxable income while keeping more money invested for growth. Make sure your adviser is digging into the details to tailor strategies that fit your goals.

• Timing Income and Deductions: With tax cuts on the horizon, deferring income or accelerating deductions could make sense. For example, holding off on year-end bonuses or capitalizing on deductions now may provide a double benefit.

Charitable giving and estate planning

Giving back to the causes you care about can also be tax efficient. Donor-Advised Funds (DAFs) allow you to donate now, locking in tax benefits, while deciding later how to allocate the funds. These accounts are straightforward to set up, require minimal initial funding, and provide flexibility in giving anonymously or publicly.

If your charitable plans extend to trusts, you might explore Charitable Remainder Trusts (CRTs) or Charitable Lead Trusts (CLTs). While these tools require more setup time and complexity, they offer unique benefits such as tax-controlled income or eventual wealth transfer to heirs.

And for families considering wealth transfers, the current estate tax exemption levels may not last beyond 2025. Gifting up to the allowable limit of $18,000 per beneficiary in 2024 removes assets from your estate and potentially lowers your tax bill upon death.

Retirement and investment planning

Even the best-laid retirement plans are being challenged in today’s environment. According to Wealth Enhancement’s recently released retirement lifestyle study, inflation concerns have delayed retirement goals by over eight years on average. Even among those who feel financially prepared, 80% believe retirement is increasingly out of reach.

Here are a few steps you can take before year-end:

• Maximize Contributions: Ensure you’ve made the most of retirement account contributions. This simple but powerful move potentially lowers your taxable income while keeping your 401(k) or IRA growing steadily.

• Roth Conversions: If you’ve been considering a Roth conversion, now might be the time. This strategy lets you convert pre-tax retirement savings to post-tax savings, locking in today’s lower tax rates for future withdrawals. It’s a nuanced decision, requiring careful evaluation of today’s tax costs against tomorrow’s potential savings.

Note that traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA. Investing involves risk, including possible loss of principal.

Reclaiming financial confidence

Despite challenges, Americans are taking proactive steps towards their financial futures. Our survey revealed that 32% are setting aside more money each month, 29% are using detailed budgets, and 28% have created emergency plans. However, only 19% meet regularly with a financial adviser — a missed opportunity given the complexities of today’s environment.

The end of the year is the ideal time to act. Whether it’s optimizing tax strategies, planning charitable contributions, or recalibrating your retirement contributions, the decisions you make today can have a lasting impact. Just be sure to give your financial advisory team a few weeks to put your desired changes into effect.

Wealth isn’t accidental. It’s built through your clear intention, experienced advice, and comprehensive planning. Start today!

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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on WCCO 830 AM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com. Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, LLC, a registered investment advisor. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.