Your 2024 Financial To-Do List

What a difference a year makes! Last year at this time, most investors were seeing red throughout their portfolios, as both stocks and bonds posted losses. But as inflation eased and the Fed took its foot off the gas with interest-rate hikes, both of the major asset classes, especially stocks, have staged solid recoveries. And while the prospect of a recession loomed large at the beginning of 2023, those worries have generally abated as the year has wound down.

Helping you look forward and plan for a productive year ahead is the goal of my annual financial to-do calendar and to-do list, which plots out a number of jobs you can undertake to improve your financial life on a month-by-month basis. The myriad tasks associated with maintaining an organized financial life seem daunting in list form, but they’re more manageable when spread throughout the year.

I’ve placed time-sensitive tasks on the calendar for a specific month, such as the tax to-do items early this year, but you should feel free to tackle the other jobs in any order you see fit or to ignore those that don’t apply to you or that you’ve already achieved.

January

• See how you’re doing. Thanks to stocks’ recovery, peering at your portfolio’s balance is a bit more agreeable than it was a year ago. That makes it a good time to see if you’re on track to hit your financial goals. If you’re still in accumulation mode, review how much of your salary you managed to save and invest last year; 15% is a reasonable minimum target, but reach for a higher percentage if you’re a higher-income person/household. Also check up on your progress toward your retirement savings: Fidelity has put together some helpful benchmarks. If you’re retired, review last year’s spending rate to make sure it passes the sniff test of tenability. T. Rowe Price’s Retirement Income Calculator is a solid option for assessing whether your current strategy is on track—whether you’re still saving or already retired. I also like Vanguard’s Retirement Nest Egg Calculator. For a quick check on your withdrawal rate, required minimum distribution amounts can help. Our recent retirement spending rate research can also help you benchmark.
• Find your best return on investment. The most successful investors consider their total opportunity sets—including not just investments but also debt paydown. Are you deploying your money into those opportunities that promise the highest return on your investment? If you have high-interest-rate credit card debt, the answer is easy: You’d be hard-pressed to outearn that interest rate by investing in the market. On the other hand, you might reasonably expect to outearn your interest rate on other types of debt—such as mortgages—by investing, especially now that yields on safe(r) investments have come up. The right answers to these capital-allocation questions are individual-specific and depend on a number of factors: the interest rates on your debts versus your expected return on investments, your life stage, need for certainty (debt paydown carries a guaranteed ROI), and any tax breaks you’re earning to borrow or invest. For younger investors with lower-rate mortgages and tax-sheltered investment options such as 401(k)s, investing will tend to deliver a higher ROI, albeit with less certainty, than prepaying mortgage debt. For older investors whose portfolios are more conservative, mortgage paydown may be more attractive and delivers a nice “peace of mind” dividend, too.
• Revisit retirement-plan contributions. Contribution limits for 401(k)s and IRAs are nudging up a bit in 2024. For 401(k)s, the limit is $23,000 for investors younger than 50 and $30,500 for those 50 and older. For IRAs, those limits are going up a bit, too—$7,000 for people under 50 and $8,000 for those 50-plus. If you’re not making the maximum allowable contributions to those accounts, see if you can’t find room in your budget to elevate how much you’re putting in. If you have a high income and earn a bonus, just be sure not to run into the high-class problem of contributing too much too early to earn full matching contributions. While you’re at it, consider putting your other investment contributions—to your IRA, for example—on autopilot via automatic withdrawals from your checking or savings accounts. That is apt to help your long-term investment results versus waiting until April to make an IRA contribution, and spreading out your investments helps ensure you don’t skip that contribution altogether. Contributing $583 per month will get investors under 50 to the $7,000-per-year IRA maximum, whereas IRA investors over 50 will need to contribute $666 a month to make it to their $8,000 maximum allowable amount.
• Important date. Jan. 16 is your deadline for paying your estimated taxes for the fourth quarter of 2023 if you are self-employed or retired and don’t have taxes withheld from your IRA withdrawals.

February

• Conduct a review of your investments. If you undertook a portfolio review at the end of 2023, there’s no need to go back through it. But if you haven’t checked up on your investments for a while, it’s a good time to do so. Use Morningstar’s Portfolio Manager—and especially the X-ray functionality—to check up on your portfolio’s allocations to the major asset classes. Thanks to stocks’ fine showing in 2023—and from 2019-21, too—many investors are apt to find themselves heavy on stocks relative to their targets.
• Check in with your tax professional and gather tax documentation. Tax day will be here before you know it. That means it’s not too early to start gathering your tax-related paperwork (either physical or virtual)—especially 1099s listing any income or gains your holdings have paid out. If you’re considering itemizing your deductions, remember that they must exceed the standard deduction to be worthwhile. (For the 2023 tax year, the standard deduction is $13,850 for individuals and $27,700 for married couples filing jointly.) Taxpayers over age 65 and those who are blind get an additional standard deduction of $1,500 for the 2023 tax year. Some taxpayers may benefit from “bunching” their deductions—saving deductible outlays for a single year to gain critical mass to exceed their standard deductions.
• Take a good look at 1099s and W-2s. As these documents roll in, take a moment to gather some intelligence from these numbers before stashing them in a file or copying them onto your tax return. Your 1099 and W-2s provide valuable information about your earnings and investing habits. If your salary has increased, have you also increased your savings rate, including your 401(k) contribution? That information is available on your W-2. If you receive piddling levels of income from a number of cash accounts, can you wring a higher level of income from an online savings account? (Yields have gotten much better!) If your mutual funds made sizable capital gains distributions, would you be better off holding tax-friendly index funds or exchange-traded funds in your taxable account?

March

• Contribute to an IRA for 2023. April 15 is your deadline for filing your 2023 tax return, and it’s also your deadline for funding an IRA for 2023. If you haven’t yet made your contribution, it’s time to get on the stick. For 2023, contribution limits are $6,500 for those younger than 50 and $7,500 for people older than 50; they’re going up to $7,000 (under 50) and $8,000 for 2024.
• Fund your health savings account for 2023. You also have until April 15 to make a contribution to a health savings account if you want your contribution to count for the 2023 tax year. For 2023, individuals with self-only coverage through a qualifying high-deductible healthcare plan can contribute $3,850 to an HSA, whereas those with family high-deductible coverage can contribute $7,750. People older than 55 can contribute an additional $1,000 to their HSAs. Those thresholds are going up for 2024, to $4,150 for self-only coverage and $8,300 for family coverage—plus an additional $1,000 for people over age 55. An HSA can make an excellent ancillary retirement savings vehicle for investors who are maxing out their contributions to their traditional 401(k)s. Contributions are pretax (or deductible if you contribute to an HSA on your own) and compound tax-free, and qualified withdrawals are tax-free.

April

• Know what to save and what to shred. Tax time has a way of reminding us of the shortcomings of our filing systems for financial paperwork. While the pain of digging around for the documents you need is still fresh, resolve to get organized. If your file drawer is bulging with old statements, prospectuses, and utility bills from 2003, it’s time to do some culling. Before you start shredding old financial statements and trade confirmations, make sure that you have documentation regarding your cost basis—or that your financial provider does. (Mutual fund companies and brokerage firms are now required to maintain cost-basis information, but that wasn’t the case until early last decade.) You can safely shred or pitch some of those documents, but you should keep others, either in hard copy or electronic form. Store very hard-to-replace documents (birth and wedding certificates, for example) in a safe-deposit box or fireproof box.
• Go paperless. Your financial providers have probably been badgering you for years about switching over to electronic delivery of your statements. It’s time to take them up on it. After all, each piece of financial documentation that passes through the mail puts you at greater risk of financial fraud; you’re likely paying extra fees for paper document delivery, too. Before going paperless, make sure that your computer security is up to snuff and that you can readily retrieve all of the data you rely on using the company website.
• Create a master directory. Every household needs a basic document outlining financial accounts, along with the provider name, account number, URL, and the names of any individuals they work with. Encrypt an electronic document (or keep it under lock and key if it’s a physical paper) and alert a trusted loved one of its existence.
• Important date. April 15 is your tax-filing deadline for your 2023 return. It’s also your deadline to file an extension if you need more time. Individuals will also need to make their quarterly estimated tax payments by this date. Finally, April 15 is your deadline to make an IRA or HSA contribution for the 2023 tax year (see above).

May

• Assess your emergency fund. Unexpected expenses can crop up no matter your life stage, making it essential to hold liquid reserves—apart from your long-term retirement assets—to defray them. For most households, holding three to six months’ worth of living expenses in true cash instruments is a good starting point, though people who earn high salaries, have volatile earnings streams, or are the primary earner in the household will want to hold more. Higher interest rates are good for savers in these accounts, but inflation will often eat up most of the yield you receive from guaranteed investment types.
• Assess liquid assets if retired. Retired people will want to hold even more cash, in case one of their income sources is disrupted for some reason. Knowing that their near-term income needs are covered can also help retirees ride out volatile times with their long-term portfolios. A Bucket strategy for retirement portfolio-planning employs dedicated cash reserves, then takes on more risk with longer-term portions of the portfolio. Retirees will also want to include a bit extra in their cash cushion to protect themselves against needing to dip into investment assets if they need emergency cash during a market downturn.

June

• Create or review your investment policy statement. Running your portfolio without an investment policy statement is a little like trying to build a house without any blueprints. Your IPS needn’t be complicated, but it should convey the basics of what you’re trying to achieve: your financial goals and expected duration/completion, your asset-allocation policy, your criteria for selecting investments, and the specifics of how—and how often—you’ll monitor the whole thing. If you already have an IPS, it’s a good time to review it to make sure that it syncs up with your current situation and reflects your current belief system and investment approach.
• Create a retirement policy statement. Retired people should also craft a document that addresses the specifics of their spending strategies: their targeted income needs and how much of them will be covered by pensions and Social Security; their portfolio spending rate and the extent to which it might change over time; and whether they’re using an income-centric, total-return, or blended approach.
• Important date. Investors who are paying quarterly estimated tax payments will need to have them in by June 17.

July

• Evaluate the viability of your portfolio and your plan. Midyear is a good time to conduct a portfolio checkup, because you have time to course-correct if you’ve gotten off track. Focus on the fundamentals of your plan and your portfolio, including its asset allocation, whether your savings and spending rates are on track, and salient changes with your holdings.
• Conduct a cost audit. In addition to checking up on your portfolio plan, it’s also worthwhile to periodically assess the costs you’re paying to keep the whole thing running. Because they rarely write a check for financial services, most investors are tremendously insensitive to the dollars and cents they’re forking over for fund management, trades, and advice. Spend some time reviewing these costs and translating those percentages into dollars and cents—then see if you can shave them down. Swapping high-cost funds for lower-cost ones is one of the easiest ways to bring your cost load down; investors can buy broad-market index funds for well under 0.1%.
• Conduct a tax audit. In addition to checking up on your portfolio’s direct costs, also conduct an audit of the drag taxes are exerting on your return. Your 2023 tax return can serve as a valuable guide to the tax efficiency of your portfolio. Are you taking maximum advantage of your tax-sheltered options, including 401(k)s, IRAs, and HSAs? Have you revisited your decision about whether to make traditional or Roth contributions to your IRA and company retirement plan? If your taxable holdings kicked off substantial capital gains distributions in years past, see if you can’t make some tax-efficient tweaks, such as switching to index funds and ETFs for your equity exposure and adopting municipal bonds for your nearer-term cash needs.

August

• Craft or revisit your estate plan. Planning for your own disability or mortality isn’t pleasant, which is probably why many people would sooner clean out their gutters than work on an estate plan. Others may assume that estate planning is unnecessary for them, given that the estate tax exclusion is nearly $14 million per individual in 2024. But a basic estate plan—in which you determine who will inherit your assets, serve as a guardian for your minor children, and make important decisions on your behalf if you cannot make them yourself—is a must for people at all life stages and wealth levels. Do-it-yourself estate-planning kits are increasingly easy to come by and may help you tick some of the boxes if your situation is very straightforward. But many of us have special situations—special-needs loved ones, our own businesses, or complicated family situations, for example—that call for a customized estate plan drafted by an attorney.
• Review your beneficiary designations. Many investors aren’t aware that beneficiary designations for 401(k)s, IRAs, and other accounts supersede the information they’ve laid out in their wills. Thus, if you’ve gone to the trouble of drafting a will or creating trusts, it’s essential that your beneficiary designations sync with what’s in those documents.
• Get a plan for your digital estate. Do you have a plan for your digital footprint—your social media or email accounts, for example? Most people don’t. Consider crafting a digital estate plan to complement your regular estate plan.
• Consider the softer aspects of your estate plan. Legal documents tend to hog the spotlight in estate-planning discussions, and for good reason. But while you’re dotting your i’s and crossing your t’s, spend some time thinking through the softer aspects of your plan. Whom do you want to inherit your important, but not necessarily valuable, possessions? Have you given thought to the specifics of whether and how you want friends and family to gather upon your passing? What’s your plan for your pets? Discussing some of these issues with your loved ones can help them be at peace with the decisions they may eventually make on your behalf.

September

• Review your long-term-care plan. Long-term care is another one of those topics that is no fun to think about, and unfortunately, there are no easy answers about whether to buy insurance or self-fund using your own portfolio. To make an informed decision, it’s helpful to use data to help you understand the likelihood that you’ll need long-term care, the potential duration, and the costs. It’s also important to understand the lingo surrounding long-term care. Armed with that information, you can then create a long-term-care plan that suits your situation.
• Important date. Investors who are paying quarterly estimated tax payments will need to have them in by Sept. 16.

October

• Kick college funding into high gear: Are your children or grandchildren growing by leaps and bounds, yet you haven’t given their college plans more than a nervous thought (or two or three)? If so, it’s time to take a hard look at how you’ll pay for it and whether you’ll hold the money in a 529 or some other account. Morningstar’s Save for College center provides a wealth of information on 529 plans and college funding in general. And remember, the retirement legislation called Secure Act 2.0 allows you to roll over up to $35,000 in unused 529 assets into the same beneficiary’s Roth IRA, subject to annual IRA contribution limits.
• Important date: If you received an extension on your 2023 tax return, you must have the return completed and postmarked by Oct. 15, 2024.

November

• Conduct an insurance review. Most employers offer open enrollment for health insurance and other benefits at year-end, but it’s also a good time to take stock of your other types of insurance: property/casualty, life, disability, and so on.
• Watch out for capital gains payouts. Mutual funds typically distribute capital gains in December, and by November, fund companies are usually publishing estimates of their impending distributions. At a minimum, you want to avoid buying a fund just before it makes a distribution.

December

• Be generous. If giving financial gifts to loved ones is on your to-do list, you can be exceptionally generous without making your estate susceptible to the gift tax. For 2024, each individual can gift up to $18,000 per person per year without having to file a gift-tax return, and all but ultrawealthy, ultragenerous people will never pay gift tax during or after their lifetimes. Year-end is also a good time to squeak in charitable contributions that may lower your tax bill. With the higher standard deduction amounts that kicked in in 2018, taxpayers may find it helpful to bunch their itemized deductions into a single year while claiming the standard deduction the next. Investors who are age 70.5 or older can also direct distributions from their IRAs to charity via a qualified charitable distribution, reducing their taxable income for the year and also reducing the amount of their portfolios that are subject to required minimum distributions in the future.
• Conduct a year-end portfolio review. While you’ve no doubt paid some attention to your portfolio throughout the year, year-end is a good time to give it a thorough checkup. If you own investments in your taxable account that have lost value, selling to generate a tax loss is a way to find a silver lining. The 0% long-term capital gains rate is also in effect for 2024, so investors whose income puts them under the thresholds may be able to engage in tax-gain harvesting. And investors at all income levels can improve their portfolios by repositioning within their tax-sheltered accounts, where they’ll pay no taxes following changes as long as the money stays inside the account.
• Take your required minimum distributions. If you’re of RMD age (73), you know the drill: Dec. 31 is your deadline for taking RMDs from your tax-deferred accounts, such as IRAs and 401(k)s. Affluent retirees love to hate their RMDs, but I always recommend that retirees trim their distributions from holdings they wanted to prune anyway—positions that have grown too large, for example, or funds and stocks that have outlived their usefulness. Doing so has the potential to improve your portfolio. If you’re in the enviable position of not needing your RMDs to live on, consider steering a portion of the distribution, up to $105,000 in 2024, to charity via the qualified charitable distribution maneuver.
• Important date. Dec. 31 isn’t just New Year’s Eve; it’s also your deadline for a number of financial to-do items, such as 401(k) contributions. Investors who are required to take minimum distributions from traditional IRAs and 401(k)s will need to do so by Dec. 31, too.

This is the December 2023 edition of an annual article.