The final months of the year are a critical time for financial planning, especially for baby boomers nearing or in retirement. Strategic action now can significantly improve your financial standing for the year ahead. Here are four key steps to take before 2026.
Maximize Retirement Savings
For those still working, prioritize maxing out 401(k)s, IRAs, and Roth IRAs while income is still flowing. Compounding returns are most effective when contributions are consistent, and taking advantage of catch-up contributions for older savers is essential. Even if full contributions aren’t possible, securing the full employer match is a must – it’s free money that won’t last forever.
Plan for Required Minimum Distributions (RMDs)
If you’re 73 or older, the IRS requires you to take distributions from tax-advantaged retirement accounts. Failing to do so can result in a hefty 25% excise tax. For those who turned 73 in 2025, the deadline is April 1, 2026, but everyone else must act by December 31. The final quarter of the year is the time to strategize for the associated tax implications.
Reduce Your Tax Burden with Charitable Donations
The IRS allows those 70 ½ or older to bypass RMD rules with qualified charitable donations (QCDs) of up to $108,000. This strategy allows you to avoid higher tax brackets while remaining under phase-out thresholds for tax credits and deductions. The deadline to execute this strategy for 2025 is December 31.
Consider a Roth Conversion
Converting a traditional IRA to a Roth IRA triggers a tax bill now, but some boomers can win in the long run by doing so. Roth IRAs allow tax-free withdrawals and don’t impose RMDs like traditional accounts. Heirs can also inherit them tax-free. The deadline to include a Roth conversion in your 2025 taxable income is December 31.
Final Thoughts: These moves require careful consideration and may benefit from professional financial advice. However, taking action now can significantly improve your financial security in retirement. Don’t delay – the year-end deadline is fast approaching
