BALTIMORE, Dec. 6, 2021 /PRNewswire/ -- T. Rowe Price, a global investment management organization and a leader in retirement, has published expert tips for year-end financial planning for retirement savers. The approaching new year is an opportunity for all investors to review financial plans and refocus financial goals.
Some key considerations include:
At the end of the year, mutual funds must distribute any dividends and net capital gains earned on their holdings over the prior 12 months. Tax-loss harvesting is one strategy that investors can consider, which involves selling certain positions in a portfolio at a loss, usually in order to offset either short-term or long-term capital gains. Since tax rates on short-term gains are generally higher, offsetting those gains could be particularly valuable.
When it comes to asset allocation, investors should keep a long-term perspective with their strategy and make adjustments throughout their horizon, particularly as they approach retirement or when life circumstances change. While planning for the new year, investors should revisit their asset allocation strategy to ensure it is still on track with their long-term goals.
Catch-up contributions are a way to help investors save more in the years leading up to retirement and are a strategy to consider for those approaching retirement as they revisit their financial plans for the new year. Catch-up 401(k) and IRA contributions allow people 50 years and older to benefit from additional tax-advantaged savings. Over time, these higher catch-up contribution limits can help investors increase their total retirement savings.
"One of the most common questions I get from investors is about asset allocation," said Judith Ward, CFP®, senior retirement insights manager at T. Rowe Price. "Asset allocation is a key component of an investor's portfolio and the end of the year is a great time for investors to revisit their strategy and make sure it still makes sense for their future."
"One thing for investors to keep in mind as they determine their year-end tax approach is to stay focused on the long-term," said Roger Young, CFP®, senior retirement insights manager at T. Rowe Price. "Making investment decisions solely on tax considerations could result in expensive mistakes that reduce overall returns."
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Founded in 1937, T. Rowe Price (NASDAQ-GS: TROW) is an independent global asset management company with $1.67 trillion in assets under management as of October 31, 2021. The firm is focused on delivering investment excellence and retirement services for institutional, intermediary, and individual investors. Our strategic investing approach, driven by independent thinking and guided by rigorous research, helps clients feel confident in pursuing financial goals. For more information, visit troweprice.com, Twitter, YouTube, LinkedIn, Instagram, or Facebook.
SOURCE T. Rowe Price Group, Inc.