The new year is always a good time for a fresh start. However, one of the best ways to prepare is to take purposeful steps toward your goals in December, perhaps with the assistance of a professional adviser. The momentum will keep you moving into January and beyond. We encourage you to make 2025 your best financial year yet by following our suggestions below.

Ensure You Have Health Insurance

Regardless of age, health, genetics or wealth, you and your loved ones need continuous health insurance. A study by academic researchers found that two-thirds of personal bankruptcies were tied to medical issues and the high cost of care, time out of work or both.

If you or your family members lack health insurance, visit healthcare.gov immediately. If your employer offers it, pay attention to the open enrollment deadline so that you can review your options.

Review Contribution Limits

Everyone knows to save for retirement, but have you contributed as much as you’re financially able this year? Consider your IRA, 401(k), 403(b) or SIMPLE IRA. How much more can you contribute by Dec. 31? If your goal is the yearly maximum, the 2025 limits are shown below.

Double-Check Your Taxes

If you are self-employed or had a significant increase in income in 2024, consult with your accountant or tax preparer without delay to ensure you met the guidelines for estimated income tax payments and will avoid penalties. Your accountant might recommend other year-end actions to reduce your 2024 federal and state taxes.

Make Charitable Gifts

The holiday spirit encourages us to think of others. It’s also a great time to donate to causes near and dear to your heart and potentially save on taxes. Make sure any gifts are made by Dec. 31.

You might consider making charitable gifts from an IRA or appreciated securities. Tax laws allow IRA gifts (also called qualified charitable distributions) of up to $105,000 annually by anyone aged 70½ or older. The gifted amount is not subject to federal income tax, but you do not get a charitable gift deduction. Be sure the charity is an eligible recipient of IRA gifts.

Appreciated securities or other types of property with unrealized gains also can be given to charity. The best part is you get a charitable income tax deduction for the gift’s fair market value and avoid the long-term capital gains tax on the appreciated asset.

We recommend working with your tax or financial adviser on complex gifts.

Subsidize Someone’s Education

For taxpayers with kids or grandkids, consider transferring money to a 529 college savings plan for a possible deduction on state taxes. (Remember to investigate your state’s laws and the benefits.) Again, you should make the contributions by Dec. 31.

Help With Employee Student Loans

The CARES Act allows employers to make up to $5,250 in tax-free payments toward an employee’s federal student loans. The recipient isn’t taxed on the “income,” and the employer can deduct the payments while avoiding additional payroll taxes. This strategy might be a recruiting and retention tool for business owners.

Complete Required Minimum Distributions

Since 2023, people ages 73 or older must take minimum distributions from their retirement accounts, such as IRAs, SIMPLE IRAs, SEP IRAs, 401(k)s and 403(b)s. Roth IRAs are exempt. If you need to take a minimum distribution or are unsure whether yours was processed, immediately contact your adviser or the financial institution that manages the account.

TAKE 6 STEPS FORWARD

Once you gain financial momentum through wise, year-end choices, these six actions can keep you rolling into 2025.

1. Review your spending. Calculate your expenses and cut back in some areas. A tracker like Simplifi can summarize and categorize your spending. Next, review your subscriptions and cancel anything you don’t need. Finally, set (and abide by) monthly spending limits in specific categories, such as eating out and shopping. Try setting aside cash for those expenses. When the money is gone, you stop spending.
2. Increase your retirement plan contributions. Consider putting more money into your 401(k) or starting an automatic monthly IRA contribution. Those small steps make a big difference over time. If you want to maximize your contributions, the first January paycheck is the perfect time to modify your 401(k) deposits to ensure you reach the annual limit.
3. Start an employee 401(k) plan. Is it time for your veterinary practice to add an employee retirement plan? Many factors go into choosing the best one for your unique situation. If your practice already has a 401(k), get a second opinion. Review the plan’s fees, performance and design. Trust your gut and answer these questions: Is it competitive? Do I understand it?
4. Look into life insurance. No one wants to leave a legacy of financially struggling survivors, yet, inexplicably, many people are underinsured. Term life insurance is inexpensive for those who qualify medically. Check out the Bankrate calculator at bit.ly/3Bz4LMD to see whether you have enough life insurance. Also, review your disability insurance coverage. If you get sick or hurt and can’t work, will it pay all the bills? Will the proceeds be taxed? Should you get a supplemental policy?
5. Review your investment accounts. The funds you set aside might represent a substantial portion of your life savings. Be sure you understand how they are managed, and review their performance at least annually. Are you sitting on a big pile of cash? Read our most recent story [go.navc.com/investing-TVB] on why now is a good time to invest.
6. Invest in estate planning. What happens when you die or become incapacitated? The subject isn’t fun to think about, but you should plan for it. Who will handle your affairs? Will your estate be subject to probate? Who will inherit your property, investments and business? Have you included gifts to your favorite causes? Schedule a meeting with an estate-planning attorney to ensure an orderly and private transfer of wealth. A well-planned estate is a huge blessing to your heirs. While you’re at it, review your beneficiary choices, especially on your investment and retirement accounts, life insurance policies, and company-provided life or disability insurance policies.