As December’s final weeks unfold, savvy investors are making strategic moves to position their portfolios for long-term success. With less than a month remaining in 2025, now is the perfect time to implement key financial strategies that could significantly impact your retirement readiness—particularly if you’re approaching or have already crossed the 50-year milestone.
Christine Benz, Morningstar’s director of personal finance and retirement planning, emphasizes that these year-end adjustments aren’t just about tax optimization—they’re about building a more resilient financial foundation for the years ahead.
The Strategic Art of Portfolio Rebalancing
At the heart of effective year-end financial planning lies portfolio rebalancing, a disciplined approach that serves multiple purposes. The primary advantage centers on risk reduction through strategic asset allocation adjustments. This process involves trimming positions in securities that have experienced strong performance—typically those now carrying higher valuations—and redirecting those proceeds into underperforming assets that may offer more attractive entry points.
This contrarian approach runs counter to many investors’ natural instincts, yet it forms the backbone of successful long-term wealth building. By systematically selling high and buying low, rebalancing helps maintain your intended risk profile while potentially enhancing returns over time.
For investors nearing their spending phase, rebalancing takes on added significance. As retirement approaches and the need to actually draw from portfolios becomes imminent, the strategy shifts toward de-risking and building safer asset reserves.
Critical Considerations for Investors Over 50
Those who have reached the half-century mark face unique financial considerations that younger investors can afford to ignore. The luxury of time—which allows younger portfolios to recover from market volatility—begins to diminish as retirement looms closer. This reality makes rebalancing not just beneficial, but essential.
“It’s time to take some winnings and build safer assets that you could access if you needed to spend from your portfolio,” Benz explains. This approach recognizes that preservation of capital becomes increasingly important as the timeline for wealth accumulation shortens.
One particularly attractive opportunity in today’s market involves moving portions of equity gains into high-quality bonds. This strategy simultaneously removes portfolio risk while taking advantage of currently attractive bond yields—a win-win scenario that wasn’t available during the extended period of near-zero interest rates.
Addressing International Allocation Gaps
Beyond basic rebalancing, retirement savers should conduct a thorough review of their international allocation—an area where most American investors fall significantly short of optimal diversification. The tendency toward home-country bias leaves many portfolios overconcentrated in U.S. markets, missing out on opportunities in international stocks and the risk reduction benefits of global diversification.
When evaluating international exposure, investors should consider both their U.S. versus non-U.S. allocation and their style diversification across different market segments. This comprehensive review often reveals underperforming areas that may be positioned for future outperformance, presenting rebalancing opportunities that align with both risk management and return enhancement objectives.
The Timing Advantage of Year-End Actions
December’s final weeks offer a unique window for implementing these strategies. Year-end rebalancing allows investors to harvest tax losses while simultaneously repositioning portfolios for the coming year. This timing can provide both immediate tax benefits and longer-term performance improvements.
The key to successful implementation lies in maintaining a systematic approach rather than making emotional decisions based on recent market movements. By focusing on predetermined allocation targets and rebalancing thresholds, investors can remove emotion from the equation and make decisions based on sound financial principles.
As 2025 draws to a close, these strategic moves represent more than just year-end housekeeping—they’re investments in your financial future. Whether you’re trimming winners, adding to laggards, or adjusting your international allocation, each action contributes to building a more robust and resilient retirement portfolio.
