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The Smartest Year-End Financial Moves You Need To Make Right Now

Pam Krueger  |  November 3, 2021

The end of the year is upon us. Here’s a look at the financial moves you should make to set yourself up for success in 2022

This is the perfect time of year to take a good look at your finances and make important moves that not only help right now, but position you for a much stronger future. You still have time to make the most of tax breaks and employee benefits before the end of the year, and this is also the time to make some key decisions for 2022 during open enrollment. Also, take some time to step back and consider your financial goals for next year and beyond. After so many changes over the past 1 ½ years, it’s a good time to reassess what you want to accomplish financially and how you plan to reach those goals. The following steps can help. 

Make the most of tax-advantaged savings for retirement now

Check on how much you’ve contributed to your 401(k) or other retirement plan at work so far this year, and boost your contributions for the last few paychecks of the year if you can afford to add more. You can contribute up to $19,500 in 2021, or $26,000 if you’re 50 or older.

Your contributions can reduce your taxable income now and grow tax-deferred for the future – and contributing to your 401(k) may not lower your taxable income as much as you might think because of the tax benefits. For example, say you earn $45,000 per year and your tax bracket is 25%. When you contribute 6% of your salary into a tax-deferred 401(k), your taxable income becomes just $42,300 ($45,000 – $2,700 – $42,300). The income tax on $42,300 is $675 less than the tax on your full salary. So not only do you get savings for retirement, but you also save on taxes today. The higher your salary, the more you save and with a tax-deferred 401(k), the money invested is allowed to grow and compound free of any taxes. You benefit both now and in the future.

Plus, you may be able to get even more money from your 401(k) if your employer matches your contributions. Employers typically offer 2% to 6% of your salary in matching contributions. Don’t miss the opportunity to get that extra money – it’s like a pay raise from your employer.

Contribute to a health savings account if you’re eligible

If you have a health insurance policy with a deductible of at least $1,400 for self-only coverage, or $2,800 for family coverage, then you may be eligible to contribute to a health savings account. You don’t need to have an HSA at work – you can even open an account if you have an eligible health insurance policy on your own. The contributions are pre-tax if you make them through your employer (or tax-deductible if on your own), the money grows tax-deferred, and it can be used tax-free for eligible expenses at any time – you don’t have to use the money by the end of the year, unlike a flexible-spending account. You can use the money for your health insurance deductibles, copayments, prescription drugs and over-the-counter medications. You can also use the money for dental and vision care and other out-of-pocket medical expenses.

Even though you can use the HSA money for a wide variety of expenses at any time, it’s even better to let the money grow tax-free in the HSA for the future. Although you can’t make new HSA contributions after you enroll in Medicare, after age 65 you can even withdraw money tax-free from the HSA to pay premiums for Medicare Part B, Part D and Medicare Advantage – making the HSA a good way to build up tax-advantaged savings for medical expenses in retirement.

Spend the money in your medical and dependent-care FSAs

If you contribute to a medical or child-care flexible-spending account at work, check on the balance now and make plans to put that money to good use before the end of the year or before the employer’s deadline (some employers give you to March 15 to use money in a medical FSA or let you roll over $500 from one year to the next, for example). Check on your employer’s rules — some changed their deadlines recently. If you don’t use the money before the deadline, you’ll lose it.

You can use the money in a health care FSA for many out-of-pocket medical expenses, so this may be a good time to schedule appointments with the eye doctor and dentist, buy glasses or prescription sunglasses, stock up on over-the-counter medications, and find out what drugstore items are eligible for FSA withdrawals (such as certain sunscreens and menstrual products). You can find a list of eligible items at

If you have a dependent-care FSA, check on how much money is left in that account, too. You can use the money for child-care costs for kids under age 13 while you and your spouse work or look for work. Eligible expenses include preschool, daycare, a nanny or babysitter while you work, before- and after-school programs, and even summer day camp. Be aware of eligible expenses over these last few months of the year, and dig up any receipts for earlier expenses that may qualify.

Make smart employee benefit choices during open enrollment

This is also the time of year to make decisions about your employee benefits for 2022. Don’t just keep these choices on autopilot; make sure you’re making the most of all of your options. If you have several health insurance choices, consider your family’s medical expenses and medications for the year, as well as the doctors included in the plan’s network when choosing your plan. If your spouse also has coverage at work, also consider whether you may get a better deal joining your spouse’s plan instead, or including your kids on one plan or the other. Also consider the benefits of choosing a high-deductible health insurance policy that could make you eligible for HSA contributions, especially if your employer contributes to the account.

If your employer gives you the option to buy more disability insurance coverage, consider this benefit, too. Your employer may already offer some sick leave and disability benefits for all employees, but they may also let you buy additional coverage – you may be able to cover up to 60% of your pay – which can provide additional benefits if you become sick or injured and unable to work.

Make the most of other benefits offered by your employer, too, such as gym memberships, healthy living programs, commuting benefits, and a financial wellness program. All of these benefits can help you get even more money from your employer.

Review (really look at!) your financial goals and progress

This is also a good time to step back and assess where you stand in your financial goals – or think about whether you want to revise some of those goals. After everything that has happened, are your retirement goals the same as they were before COVID? Are you thinking more about living near family or in a less-expensive area? Did you have to adjust to a lower income or different expenses? Have your financial priorities changed? Take some time before year-end and think about these big-picture issues. This may be a good time to work with a financial advisor who can help you reassess what is important to you and help you make a plan to reach your financial goals.


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