A new year provides a wonderful opportunity to take control of your financial future. Clarifying and prioritizing your financial goals in the days and weeks ahead may align actions with intentions, increasing your chance for success. Consider the following New Year’s financial resolutions:
Update Your Financial Plan: Updating your financial plan regularly is crucial for many reasons. Significant life changes such as marriage, divorce, the birth of a child or grandchild, change in employment, relocation, or the purchase of a new home all have great impact on your finances. In addition, stock market fluctuations, unexpected expenses, and changes in interest rates or tax laws need to be considered to ensure that your strategy remains effective. In a world where change is constant, revisiting your plan regularly will help make sure that you remain on track.
Review Investment Asset Allocation: Reviewing your current investment allocation will allow you to assess whether you are comfortable with the amount of risk you are taking at your stage of life and if your current allocation will enable you to meet your financial goals. Those nearing retirement, who have less time to absorb market volatility, may wish to become more conservative by allocating more of their portfolio to fixed income while market gains and losses may require a portfolio rebalance to return to your target asset allocation.
Review Qualified Plan Contributions: Consider increasing your qualified plan contributions in the new year. In 2025, individuals may contribute up to $23,500 to their qualified retirement plans and those over 50 may make a catch-up contribution of $7,500. Beginning in 2025, those aged 60, 61, 62, or 63 can make higher catch-up contributions of $11,250 instead of $7,500.
Review Health Savings Account (HSA) Contributions: Contributing to an HSA is a great way to save for retirement as well as future health care expenses as contributions to an eligible HSA are tax-deductible, grow tax-free, and qualified withdrawals are free from tax. In 2025, HSA contribution limits are $4,300 for individuals, $8,550 for families, and an additional $1,000 for those over age 55. To contribute to an HSA, you must be enrolled in a qualifying high-deductible health plan. You cannot contribute to an HSA if you are enrolled in Medicare and non-qualified withdrawals are subject to tax and penalty.
Business Owners Consider Funding a Cash Balance Plan: Business owners with consistent cash flow and high profits who are looking for tax-deferral strategies and wish to accelerate their retirement savings may want to consider funding a cash balance plan. When structured properly, a cash balance plan allows large tax-deductible contributions in addition to funding a 401k and profit-sharing plan.
Consider a Qualified Charitable Distribution (QCD): For those over age 70 ½, a qualified charitable distribution (QCD) is a non-taxable distribution directly from your IRA to a qualified charity. For those over age 73 who are subject to annual required minimum distributions (RMD), the QCD will count toward your RMD requirement up to $108,000 per individual in 2025. The limit on QCDs used to fund a charitable gift annuity in one tax year only will increase to $54,000 in 2025. For those who do not need their RMD to cover living expenses, consider donating your RMD to charity. Amounts donated to a charity through a QCD that exceed the IRA owner’s RMD for the tax year will not satisfy a future year’s RMD.
Consider Gifting: For those who wish to support family members and other loved ones through gifting, the annual gift tax exclusion has increased to $19,000 in 2025.
Review your Estate Plan: For those who have not yet created an estate plan, consider making this a priority in the new year to ensure that your assets are distributed at death according to your wishes. We recommend reviewing the titling of your assets, your powers of attorney for property and health care, your will, and your trust with a qualified estate planning attorney every three to five years or upon a significant life event to be sure that all documents reflect your current wishes. Be sure that a trusted family member or friend knows the location of your estate planning documents.
Review Beneficiaries: Regularly reviewing beneficiary designations for all eligible accounts is crucial to confirm that named beneficiaries accurately reflect your current wishes. Major life changes including marriage, divorce, the birth or death of a family member, or a significant change in financial circumstances such as an inheritance or financial windfall require a detailed review of your named beneficiaries. The failure to regularly review beneficiary designations may result in problematic consequences and undesired outcomes. In the event the account holder passes away without a named beneficiary, or if the named beneficiary has passed away, the assets may be subject to probate. We recommend reviewing your beneficiary designations annually or upon a major life change for all applicable accounts.
Source: irs.gov, Fidelity, Schwab, cnbc.com
