Now that we are in 2025, it's time to revisit your financial strategy and position yourself for a successful year ahead. Here are six steps to set yourself up for financial success:
1. Plan for Taxes
Tax season comes fast, so early preparation can save you stress and money. Ensure you collect all your necessary tax documents, such as W-2s, 1099s, and K-1s. If you work with a CPA, now is the time to reach out and schedule an appointment to review your tax situation. By being proactive, you can avoid surprises and identify potential deductions.
2. Maximize HSA, 401(k), and 403(b) ContributionsEach year, the IRS adjusts contribution limits to account for inflation, and 2025 is no exception. The new limits are as follows:
- 401(k) and 403(b): $23,500
- Catch-Up Contributions (50+): $7,500
- Super Catch-Up (Ages 60-63): $11,250 (greater of $10,000 or 150% of the regular catch-up limit)
- HSA, Single Contribution: $4,300
- HSA, Family Contribution: $8,550
Don’t miss this opportunity to turbocharge your retirement savings.
3. Revise Your Budget
Take time to reflect on how your money was spent in 2024. Did you stick to your budget? Were there unexpected expenses that derailed you? By reviewing your spending patterns, you can fine-tune your budget to better meet your needs this year. Build in flexibility to account for rising costs or new financial goals.
4. Review Your Financial Goals
What financial goals are on the horizon in 2025? Whether you’re planning for a home purchase, a vacation, or boosting retirement savings, ensure you’ve set aside the appropriate funds. Ask yourself: Are my current goals realistic and aligned with my priorities? This is also the time to adjust or set new milestones.
5. Evaluate Insurance Coverage
When was the last time you reviewed your insurance policies? Life changes, inflation, and market conditions can impact whether you have adequate coverage. Check your life, health, auto, and homeowner’s insurance to see if adjustments are necessary. Consider speaking with our team to ensure you’re not underinsured.
6. Review Your Estate Plan
With the Tax Cuts and Jobs Act (TCJA) sunsetting in 2025, we could see some changes to estate planning. Until more legislation is passed, we will continue to monitor for any major changes that could impact our clients. For now, the gift tax exclusion has increased to $19,000 per gift giver for 2025, and the estate tax basic exclusion is at $13,990,000 per individual. If you haven’t reviewed your estate plan in the last five years, now is the time to ensure it reflects your current wishes and tax planning needs.
By tackling these six financial steps, you’ll be setting the stage for a productive and prosperous year. If you need guidance on any of these areas, consider reaching out to our wealth advisor team at WJ Interests to help you make informed decisions.
If you found these financial tips helpful, don’t keep them to yourself! Pass this along to friends, family, or colleagues who want to start 2025 on the right financial foot.
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