To thrive on a fixed income, it’s important to make smart financial decisions — and the end of the year is a perfect time to prepare your finances for the future. While healthcare and health insurance are key, they’re parts of a larger financial picture. Taxes, investments, and required minimum distributions are also important to consider.
Smart financial decisions now can reduce your tax liability and protect your savings, lowering financial stress and allowing you to enjoy retirement.To help you feel confident in these decisions, we’ve created a year-end financial checklist for retirees who want to double and triple-check that their money is working hard for them. Keep reading for tips on making your income go farther.
1. Maximize tax benefits through charitable giving
The end of the year is a great time for seniors to make money moves, and part of that includes reviewing your charitable giving strategy. Tax-efficient charitable giving for retirees helps support causes you care about while lowering your tax burden. Most donations of cash or other property are tax-deductible and must be made by the end of the tax year to qualify.
You may deduct charitable giving of up to 50% of your adjusted gross income, but the deduction may be lower depending on the type of donation. Use the IRS’s list to identify organizations that qualify for tax-deductible donations and ensure you have receipts for giving throughout the year. If there’s room in your budget, you can give more to reduce your taxable income.
2. Take advantage of IRA catch-up contributions
Adults 50 years and older have different IRA contribution limits, and understanding them is an important item on the financial checklist for new retirees. In 2025, employees with a 401(k), 403(b), governmental 457 plan, or Thrift Savings Plan can contribute a yearly max of $23,500. Employees over 50 can make a “catch-up contribution” of an additional $7,500 for a total of $31,000. The catch-up contribution is even higher for adults aged 60-63, at $11,250, for a total of $34,750 in 2025.
Maxing out tax-efficient retirement accounts like IRAs, 401(k)s, 403(b)s, etc., can reduce your overall owed taxes. If you or your spouse is still working, contributing as much as possible by the year-end deadline not only lowers taxable income but also increases your retirement savings.
3. Take your required minimum distribution
Required minimum distributions (RMDs) are mandatory withdrawals from your IRA that begin after you turn 73 and are based on your IRA account balance at the end of the year before. When you turn 73, you take your first RMD by April 1, you take your second on December 31 of the same year, and future RMDs are due at the end of subsequent years.
For example, if you turn 73 on June 3, 2025:
- Your first RMD is due April 1, 2026, based on the account balance at the end of 2024.
- Your second RMD deadline is on December 31, 2026, based on the account balance at the end of 2025.
- Your third is due on December 31, 2027, based on your 2026 ending balance.
How to calculate RMD for 2026
To calculate RMD, divide the account balance at the immediately preceding year by a distribution period from the IRS’ Uniform Lifetime Table. This table is different from the table you use if the owner’s spouse is the sole beneficiary and ten or more years younger than the owner. The IRS provides multiple worksheets and resources to calculate RMD for 2026 and determine payout periods.
4. Review your insurance policy coverage and costs
The end of the year also coincides with the Annual Enrollment Period (AEP), when Medicare enrollees can re-evaluate their plans and switch to a new one. Your Annual Notice of Change, which usually arrives by September, will outline any changes to your existing plan. This is a perfect time to check that your policies still provide the coverage you need.
Also, review your Part D formulary to ensure your old prescriptions are still covered — and that new ones will be, too. Double-check that your medications are in the right tier so that they’re not just covered, but as affordable as possible.
5. Complete your year-end budget assessment
Don’t forget to review your budget. Living on a fixed income means predictable expenses are preferable and can help prevent stress in your golden years. Compare your budgeted spend to how much you actually spent and note areas where costs can be optimized.
Use that data to understand what your expenses might look like going forward. During your policy review, calculate whether healthcare essentials like insurance deductibles, premiums, copays, and medication still fit within your budget. As you plan for the year ahead, factor in the cost of transportation, groceries, and housing, and ensure your savings are in a good place.
Protecting your retirement savings is essential during these times of uncertainty. The close of the year is the perfect time to make end-of-year money moves for seniors, ensuring your finances are in order in time for the new year. Max out your IRA contributions, lower your tax burden with smart charitable giving strategies, and review your healthcare policies for savings.
