Some people read tons of articles for year-end guidance to deal with retirement planning decisions. Lots call their accountant, money manager or advisor for advice.

My advice is no advice – it’s too late.

Avoid year-end pressure on financesToo many of us spend the final month of the calendar year assembling our files of financial documents and making sure we take Required Minimum Distributions (RMDs) from our 401(k) or rollover IRA accounts. We figure out our realized capital gains from mutual funds or stocks to date, and see if we should realize more gains or losses. We estimate our taxes for the year and consider converting a rollover IRA to a Roth IRA. Then we squeeze in tax-reducing donations to charity or the kids, along with any number of additional important actions.

There is an alternative

In a simpler world, your finances are set to work the same way year after year. Because you have planned in advance, you don’t have to worry about each year’s tactics. You know where your money is coming from, and have a good idea of how much tax you will owe.

Here is a list of the financial issues that consume most people around this time of year, and that you can avoid.

RMDs

Required Minimum Distributions became a way of life for many of the oldest Boomers this year as they turned 70½. That’s the age at which you must take payments from your 401(k) and rollover IRA accounts. With those RMDs, you have to pay taxes that were previously deferred. Which IRA account should you take it from? Should you take more than the minimum? And don’t neglect to deal with your RMDs – if you forget, you’ll pay a penalty. So think about a plan where your income is paid regularly. An income annuity meets this test.

Convert to Roth?

Retirement tax planning may lead you to consider a move of some money from a traditional IRA into a Roth IRA, which allows tax-free withdrawals. A well-thought-out plan might involve making a transfer annually over four years, for example. Ask your advisor to help you devise a systematic approach. Waiting until December to suggest this move is a little late, and you’re likely to feel harried as you make your decisions.

Estate planning

The same idea of planning ahead applies to how much you will put aside for gifts every year. Maybe each of your grandchildren has a 529 College Savings Plan and you want to support them. That’s wonderful! Talk to your spouse and the grandkids’ parents and figure out a reasonable amount. If at the end of the year you find you can’t afford it, that’s OK. Adjust your contributions. But that is the decision you should be making in mid-December – not whether or not gifts to the grandkids are a good idea.

Capital gains

My advice is to plan for maximizing spendable (after-tax) income in retirement. Before retirement, your retirement savings should be in a rollover IRA account or low-cost variable annuity, where taxes can be deferred and only paid when you receive income.

On taxable savings, we suggest you consider index funds or Exchange-Traded Funds (ETFs) where distributable capital gains are minimized. If you spend a lot of time worrying about the tax you owe on stocks or funds you sold, you are less likely to spend the end of the year enjoying the holidays.

What should you do instead of the all-consuming December dash?

Plan ahead

Taxes are tied to the calendar, of course, but the rest of your planning doesn’t have to wait until the end of the year. The big ideas of your plan – lifetime income, liquidity and legacy – shouldn’t be based on the last 30 days of the year, after all.

Avoid the scramble of making tactical changes every December. Start planning in January, instead. When the next December gets here, while others are getting around to decision-making, you will be able to implement your strategy — and enjoy yourself.

Set up an appointment to talk to Jerry. He will answer any retirement questions you have.