Kathy Byrne, CPA, CFP®
As we look ahead to 2025, it’s a great time to step back and ensure your finances are on track. Whether you’re focusing on retirement, tax planning, or just keeping your financial house in order, several key areas must be considered. Here are some practical tips to help you start the year fresh with your financial goals.
Assess Your Cash Needs and Financial Goals for 2025
Review your cash flow needs for the upcoming year. Identify any major expenses, such as home repairs, travel plans, or large purchases, and discuss them with your DHJJ financial advisor.
Inform Your DHJJ Financial Advisor About Major Life Events
Do you anticipate any major life events in 2025, such as a marriage, divorce, birth of a child, receiving an inheritance, or thinking about retiring? Be sure to share this information with your DHJJ financial advisor.
Check-in on Investment Allocation
Your DHJJ financial advisor actively manages and diversifies your portfolio according to your long-term goals, risk tolerance, and market conditions. Regular check-in with us helps ensure that the investment strategy aligns with your financial goals.
Retirement Planning: Get Ready for the Future
- Maximize Retirement Contributions
Take full advantage of employer-sponsored retirement plans like 401(k)s or 403(b)s. If you aren’t already, aim to contribute the maximum allowable amount to benefit from tax advantages and employer matching, if applicable.- Don’t forget about IRAs (traditional and Roth) – these accounts can also help you build retirement savings on a tax-advantaged basis.
- Rollover Any Old 401(k)s
Have you left an employer and forgotten about an old 401(k)? To consolidate your accounts, consider rolling it over into an IRA. - Roth Conversion Considerations
If you’re in a lower tax bracket now than you expect to be in the future, consider converting traditional retirement savings into a Roth IRA. - Near Retirement?
- Plan for Required minimum distributions (RMDs) which begin at age 73 for most retirees. DHJJ will help you strategize this requirement.
- Revisit your financial plan with your DHJJ financial advisor to ensure you are on track to meet financial goals in retirement.
- Confirm Beneficiary Designations
Confirm your retirement accounts, insurance policies, and other financial assets have up-to-date beneficiary designations that align with your wishes.
Gifting: Giving Back and Planning for the Future
- Charitable Giving
If you desire to give back, take advantage of charitable giving opportunities. Consider donating appreciated stocks or assets for a more tax-efficient contribution. Explore donor-advised funds for larger charitable donations. Qualified charitable distributions from an IRA should also be considered. - Annual Exclusion Gifting
In 2025, the annual exclusion amount is $19,000 per recipient, meaning you can gift up to this amount to as many people as you like without triggering tax consequences.
Update Your Estate Plan
Life circumstances change, and so should your estate plan. Working with an estate planning attorney can ensure your documents are current and reflect your wishes.
Protect Yourself from Fraud
- Check Your Credit Report
Regularly checking your credit report is one of the best ways to catch potential fraud early. Look for any inaccuracies or unfamiliar accounts and address them immediately. - Secure Your Passwords
Use strong, unique passwords for each account, and consider enabling two-factor authentication for an added layer of protection.
Prepare for 2024 Tax Filings
Start organizing your 2024 documents for the upcoming tax filing season. Gather your W-2s, 1099s, receipts for deductions, and any other relevant paperwork. DHJJ already has access to your Schwab tax documents, so there is no need to organize those.
Final Thoughts
As we enter 2025, it’s the perfect time to refresh and refocus your financial planning. From retirement contributions to tax preparation, reviewing your investments, and protecting your assets, these proactive steps can set you up for a healthy financial future. Contact your DHJJ financial advisor to discuss these strategies and ensure you’re on track to meet your goals.
