Jean Chatzky’s Money Moves To Make Before The End Of The Year
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Hey, everyone. Thanks so much for joining us today on Her Money. I'm Jean Chatzky. So the curtain's about to close on 2024, but it's not too late to make some smart money moves before we ring in the new year. This is the perfect time of year to take a good look at your finances and make important moves that not only help you right now, but also set you up for a much stronger 2025. What was really interesting as far as 2020

2024 is concerned is that by the numbers, it has been actually pretty incredible. If you look at the markets, for example, and this was in late December, the Dow Jones Industrial Average was up

about 18, 19% year to date. The S&P, 28% year to date. The NASDAQ, 32, 33% year to date. Those are huge numbers. And the economy, it's not doing too badly either. Inflation over the year fell from 3.4% to 2.6%.

Interest rates dropped from 5.3% to 4.6%, and we're still expecting another small reduction, quarter of a percentage point, in interest rates this month. The unemployment rate rose a little bit. It rose from 3.6% at the end of last December to 4.2%, but...

The jobs number that was just released for November showed 227,000 jobs added. That's much better than the 36,000 in

In October, it reaffirmed the confidence in the economy and caused the head of the Federal Reserve to basically say, yeah, we think we'll be able to continue apace with the rate cut that we're expecting. Finally, that consumer confidence number that we track so closely was

It, too, has been headed up lately. And Bank of America says that as a result of all of these things put together, Americans are feeling pretty good, feeling pretty flush. They're expecting holiday spending for the year to be up.

a good 7%. So that's by the numbers. And that should make you feel, many of you, pretty good about how far you've come in 2024. But what happens at the end of the year is that there are some tax

moves and some just general things that we need to look at in order to get our finances in decent shape for the year to come. And so I just pulled together a list.

I thought, let's run through them. There's no guest on this show. It's just me and you talking. Make sure that if you need to, you take a couple of notes on these things so that you remember to get them done before year end. And I am just going to

I'm just going to jump right in. The number one thing that I want you to do, and this is based on those numbers that I rolled through about how well the stock markets have done this year, is to think about rebalancing your portfolio. The gains that we saw in the markets this year were wildly uneven. Many of them came flat.

from large technology stocks. And there are sectors of the market, whole portions of the markets that haven't moved nearly as much, things like investment-grade bonds or real estate investment trusts, international stocks. The point is,

When the markets move so far so fast, unless you rebalance, which basically means selling some of your gains and buying more of things that have lost money, unless you go through that exercise, you are probably taking more

more risk than you expected to take. Your stock component has gotten out of whack and you need to readjust it or rebalance and bring it back down so that if and when the markets do turn tail, you are not going to lose too much. The exception to this is that if you have your money in a target date account or a managed account, it is probably being taken care of for you. Then again, it never hurts to check.

Second item on the list, make sure your cash is working for you. The average bank savings account right now is paying a little over four-tenths of one percent in interest. That's nothing.

If you shop around, you can still find high-yield savings accounts that are paying 10 times that in the 4% range. Banks like CIT and Everbank. You can find one-year CDs at 4.65% from America First Credit Union. You can find

two-year CDs paying just a little bit less than that. You can even find three-year minimum term non-retirement annuities that are paying 5.5%. And these are not retirement instruments. These are annuities that work like CDs. You may remember we had a guest on the show earlier in the year named Minji Ro from Gainbridge.

Gainbridge has a product like this called Fast Break, but if you know that you can lock your money up for two or three years and simultaneously you know, as we do, that interest rates are heading down, locking into those rates for your cash is a smart thing to do.

Number three, take your required minimum distributions. If you are 73 years old or older, the age went up from 72 last year, it'll go to 75 in the year 2033. You need to make sure that you take your RMDs from your retirement accounts before the end of the year. Now, the exception to this is that if this is your first RMD, you have until April to get it done.

If you're not clear on the amounts, your tax advisor can help you, tax software can help you, but you want to get this right because penalties for not taking your RMDs are 25% of the amount that you should have taken. That is serious money.

Her Money is proudly sponsored by Edelman Financial Engines. Preparing for the unexpected tomorrow is what gives us the peace of mind to live a life of freedom today. Protecting your family is about so much more than just saving and investing. Having a conversation about your wealth is an important part of your protection puzzle. Explore your options with a complimentary wealth checkup.

Visit plan E F E.com slash her money or call 8 3 3 3 0 4 P L A N. Fourth on the list, Roth conversions. We have done whole shows with Ed slot, who is the, uh,

champion, the king of Roth conversions. There's a little less pressure right now to do these Roth conversions so fast. We were afraid that if former president, now president-elect Trump, was not re-elected, the 2017 Tax Cuts and Jobs Act would escalate.

essentially expire and tax rates would go back to where they were before. He's coming back into office. It's very likely that those lower tax brackets are here to stay. They may even be made permanent. But Roth conversions can still make a lot of sense for people who want to either shrink or

Retired Minimum Distributions in the future or leave their retirement account to their heirs. Or if you just happen to have the money to pay the taxes right now, it's a nice feeling to know that you've got some Roth assets and some traditional assets heading into retirement.

Next item on the list, review your beneficiaries. If it's been a while since you looked at the beneficiaries you named on your insurance policies and your retirement accounts, it's time to do it because retirement accounts and insurance policies have beneficiary designations that

override a will. So if you have had changes in your family, marriage, divorce, death, birth, all of these things can change who you want to be your beneficiaries. And you want to make sure that you've also named successors for those beneficiaries. And while you're doing that,

Take a moment to just review your overall estate plan. This is something that I think everybody should be doing at least once every three years. But what I know is that there are many people who've gone much, much longer without a review, and that can cause problems for your executors and for your heirs.

Also, this is the time of year where we consider gifting. And when I say gifting, I'm talking about annual gifting or using up your ability to give some of your money to your heirs now while you're alive rather than at death. The question you want to be asking yourself, and by the way, this is one you talk about with your tax advisor. It's one that you talk about with your financial advisor, but you think about the

question of whether your money will actually help the people that you want to help more during your life than at your death. I'm 60 years old. We all know that by now. But if I continue to live a decently long life, I'm going to have to

My kids are going to be in their 50s and 60s by the time they get any of my money, and I hope they are well set by then. Maybe it could help them more now to get into their first house or do something else that is an important item on their list. Not something for everyone. You definitely want to make sure that your own retirement is taken care of.

But once you know that you have checked that box or that you're on the road to check that box, this is something to start talking to your advisors about. Finally, just a couple more items to consider. Make 529 contributions. Most states...

right now allow you to take a tax deduction each year for contributing to a state-sponsored college savings plan. Now, typically, you have to contribute to your own state's plan in order to qualify for this. Your contributions grow tax-free. They can be withdrawn without paying additional taxes as long as they're used for qualified educational purposes. And we've

We've been having a lot of conversations lately about, well, what if that child doesn't go to college? There's now a provision, thanks to the SECURE Act, that up to $35,000 can be rolled over to a Roth IRA in that same child's name. So that is something to help you rest easier. And finally...

It's time for tax loss harvesting. Lest you think that stocks have not lost money this year, there are plenty of stocks that have lost plenty of money. I pulled a list of the top 10 losers, and they're big names like Intel, Nike, Boeing, Adobe, CDS, UPS, Estee Lauder, Lululemon, Moderna, Humana, I could go on and

on and on. Tax loss harvesting is when you sell losing stocks in your portfolio or losing investments to offset any gains that you've taken, any capital gains liabilities plus up to $3,000 in ordinary income.

Finally, if these are the kinds of things that you wish that you were thinking about and talking about on a regular basis, I would love to invite you to join the next session of my money makeover program. It's called Finance Fix, and it is perfect for you.

is perfect for anyone who wants to create a budget, refresh an existing one, or find extra savings for a big goal like retirement. Our next session, which is specifically for pre-retirees, kicks off January 8th. Spots are filling up fast, so sign up today using code HOLIDAY for $100 off now.

And we are rolling out classes for the younger people in your life. We've heard from some of our listeners they want to give these classes to their kids, to their nieces and nephews as a gift. We love that idea all around. Let's make 2025 your strongest financial year yet. Hope to see you there.

If you love this episode, please give us a five-star review on Apple Podcasts. We always value your feedback. And if you want to keep the financial conversations going, join me for a deeper dive.

Her Money has two incredible programs, Finance Fix, which is an eight-week program designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets biweekly on Zoom. With both programs, we are leveling the playing fields for women's financial confidence and power. I would love to see you there.

We'd like to thank our sponsor, Edelman Financial Engines. Her Money is produced by Haley Pascalides. Our music is provided by Video Helper and our show comes to you through Megaphone. This podcast is also part of the Airwave Media Podcast Network. You can find us and other shows like us at airwavemedia.com. Thanks for joining us and we'll talk soon.

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