7 Money Moves the Rich Will Make Before the End of the Year — and Why You Should, Too

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7 Money Moves the Rich Will Make Before the End of the Year — and Why You Should, Too

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It might seem like rich people have it all figured out when it comes to finances, but there’s a difference between

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and maintaining it. Even those who are already well-off will make certain year-end money moves to keep their finances on track.

The good news is that you don’t have to already be rich to do some of the same things.

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Maximize Retirement Contributions and Overfund If You Can

If you’ve got retirement accounts, like a 401(k) or IRA, the end of the year’s a good time to make sure you’ve maximized your contributions. If you don’t have a retirement account, now’s also a good time to set one up — either on your own or with an employer as the case may be.

“The 2024 limits for employee pretax and Roth contributions are $23,000, plus an additional $7,500 for ages 50-plus. If your employer allows after-tax contributions and overfunding of your 401(k)/403(b) plan, you can fund up to $69,000 per year, allowing you to convert those after-tax contributions into a Roth 401(k) or IRA,” said Patrick Doherty, SVP and financial advisor at

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. “This is a terrific strategy for anyone maximizing their 401(k) and still saving money outside of their retirement accounts as building up tax-free accounts makes your long-term income more flexible.”

If you have a 401(k) and expect to receive an end-of-year bonus, consider allocating some or all of that into your retirement account, too.

Plan Ahead:

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Clean Up Your Finances

“My mindset at the end of the year is that it’s a great time to clean up your finances. As an added benefit, by taking action before the year ends, you can take advantage of certain tax breaks or opportunities that won’t be available once the calendar turns,” said R.J. Weiss, a certified financial planner (CFP) and the CEO of

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There are many ways you can do this, such as by maximizing your retirement account or health savings account (HSA) contributions.

“For example, if you have a high-deductible health plan (HDHP), maximizing your HSA contributions is smart, as it offers triple tax benefits,” said Weiss. “Additionally, if your medical expenses have been significant this year and you’ve already met your deductible, consider taking care of any other medical expenses before the year ends.”

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If your medical expenses exceeded 7.5% of your income, they’re also tax deductible.

“So, if it’s been a costly year medically, it might make sense to accelerate some expenses into 2024 rather than delaying them to maximize potential tax benefits,” said Weiss.

Consider Tax-Loss Harvesting

Tax-loss harvesting is a strategy that entails using capital losses from one asset or investment to offset the taxes they owe on the capital gains from another. It’s something you might be able to do even if you’re not rich. All you need is a taxable account.

“Take loses by selling an investment that is underperforming [and] reinvest the cash,” said Doherty. “We have had many clients misunderstand the $3,000 capital loss limit. You can deduct up to $3,000 per year if you do not have any gains to offset the losses, but you can also carry those additional losses forward for future years when you have capital gains which therefore reduces your capital gains tax.”

Prepare For Rate Changes

Interest rates can fluctuate, so it’s a good idea to be prepared for those going into the coming year.

“I’m telling people to evaluate how fluctuating interest rates might affect their cash flow,” said Weiss. “If you’ve been benefiting from high interest rates on savings, it’s smart to consider how potential rate drops could impact your financial strategy moving forward. While I don’t know when and if interest rates will drop, preparing for the scenario is always a sound move.”

Lock In Higher Rates

If you do have interest-bearing accounts, now’s a good time to lock in higher rates if you can.

“If you haven’t locked in any high interest rates yet with Treasury bills or high-yield CDs, now’s the time to do it,” said Joseph Camberato, CEO at

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. “Rates might start dropping soon, so lock in while you can.”

Even though you can’t predict with certainty what’ll happen with rates going forward, it doesn’t hurt to make sure you’ve got the best rates possible right now.

Consider Roth Conversions

Another money move to consider is a Roth conversion.

“Roth conversions are perfect for individuals with higher traditional IRA/401(k) balances who had a lower income year,” said Doherty. “Roth conversions allow you to take advantage of lower tax rates and build a tax-free bucket. They also provide an added benefit of lowering future RMDs and making your estate more tax efficient.”

Consider Charitable Contributions

Many wealthy people benefit from making charitable contributions before the end of the year. Depending on your age and financial situation, you could, too.

“If you are under 70.5 years old, you can use donor-advised funds to bunch donations together over several years in order to help you reach the itemized tax deduction threshold. Donating appreciated stock to a donor-advised fund allows you to avoid paying capital gains as the stock is liquidated in the donor-advised fund. This works well for anyone with appreciated assets who is looking to itemize their tax return,” said Doherty.

Be sure to check the standard deductions as these change based on year and filing status.

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