5 Financial To-Dos Before the End of 2025

Financial experts are urging investors to take strategic steps as 2025 nears its end, with particular attention to portfolio rebalancing, retirement contributions, and tax-efficient charitable giving.

Christine Benz, Morningstar’s director of personal finance and retirement planning, emphasizes that portfolio rebalancing offers significant risk reduction benefits, especially for those approaching retirement.

“The main benefit of rebalancing is risk reduction,” Benz explains. “You trim securities that have performed really well, presumably ones with higher valuations today. And you redirect the money into securities where returns have lagged, but valuations might be more attractive.”

This practice becomes increasingly important for investors over 50, who should consider shifting some of their investment gains into safer assets like high-quality bonds. With bond yields currently attractive, this strategy not only reduces portfolio risk but also positions investors to access funds when needed without selling volatile assets during potential market downturns.

For those still in the workforce and building their retirement savings, Benz recommends examining international exposure. Most American investors are underallocated in non-U.S. markets, potentially missing diversification opportunities. Style diversification also deserves attention, with investors advised to consider underperforming market sectors that might present value.

Year-end financial planning should include maximizing retirement contributions before December 31st. Workers over 50 can make catch-up contributions to their retirement plans, with special provisions this year for those between 60 and 63. While employer plan contributions must be completed by year-end, investors have until the tax filing deadline to contribute to IRAs and Health Savings Accounts (HSAs).

For retirees over 73 subject to Required Minimum Distributions (RMDs), Benz suggests aligning these withdrawals with rebalancing efforts. “By using appreciated securities to meet your RMD, you de-risk your portfolio, satisfy the IRS’ obligations, and may free up assets to supply your cash flow needs for next year,” she notes.

Insurance coverage review should be part of year-end financial housekeeping. Whether participating in employer open enrollment or Medicare selection, consumers should evaluate changes in their personal circumstances and available plans. This is particularly important for employer-provided plans, which typically change annually. Married couples should consider whether individual coverage through each spouse’s employer might be more cost-effective than family coverage through one plan.

Charitable giving presents another opportunity for financial optimization, especially for investors with highly appreciated holdings in taxable accounts. Donating such assets directly to charities or to donor-advised funds can reduce portfolio risk while eliminating capital gains tax liability. These donations may also qualify for tax deductions.

For those 70½ and older, qualified charitable distributions (QCDs) offer a particularly efficient giving method. “The amount donated is not taxable to you, and it will satisfy your RMD,” Benz explains. Even for those not yet subject to RMDs, this approach reduces the future IRA balance that will eventually face mandatory withdrawals.

The convergence of year-end tax planning, charitable giving, and portfolio management provides investors multiple opportunities to strengthen their financial position heading into the new year. By addressing these areas strategically, investors can potentially reduce risk, minimize taxes, and position themselves for long-term financial stability.

Financial markets have experienced significant sector rotation in 2025, making rebalancing particularly relevant for investors with concentrated positions in technology or other high-performing sectors. Meanwhile, rising interest rates have created one of the more favorable fixed-income environments in years, offering retirees meaningful income potential from lower-risk assets.

As market analysts look toward 2026, these year-end adjustments may prove particularly valuable in navigating potential economic transitions and maintaining portfolio resilience regardless of market direction.