Consistent with our new year’s theme of starting the new year out on a great financial footing, one cannot overlook planning for your retirement future. Now is a good time to review your alternatives and plan to take full advantage of programs available to you and your family. Here are some ideas.

• Maximize your employer retirement benefit. The first place to start is to look to see what your employer offers in the way of retirement benefits and ensure you are taking full advantage of those benefits. So if your employer offers matching contributions, now is a great time to double check that you’re contributing enough to your 401(k) to take full advantage of this benefit. Matching contributions are essentially free money that can significantly boost your retirement savings over time.
• Leverage new catch-up contribution limits. One of the most significant updates for 2025 is the increased catch-up contributions for certain retirement accounts. For 401(k), 403(b), and SIMPLE IRA plans, individuals age 50 and older can contribute additional amounts beyond the standard annual limit. There’s also now a supersized catch-up contribution limit if you’re age 60 to 63.
• Re-evaluate your investment portfolio. Consider reviewing your portfolio regularly or consulting with a financial advisor to ensure it aligns with your retirement timeline and risk tolerance.
• Explore Health Savings Accounts (HSA). If you’re enrolled in a high-deductible health plan, an HSA can be a valuable tool for retirement planning. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. After age 65, you can use HSA funds for non-medical expenses, though these withdrawals will also be taxed like regular income.
• Consider opening an IRA. Many employees maintain employer-provided plans without realizing they could also establish a traditional or Roth IRA. Use this time to review your situation and see if these additional accounts might benefit you or someone else in your family.
• Automate your savings. Consistency is key when it comes to retirement savings. Consider setting up automatic contributions to your retirement accounts to ensure you’re consistently saving.

The best way to take advantage of increases in annual contribution limits is to start early in the year. Remember many tax beneficial retirement plans have annual limits. If you do not max out your annual opportunity, that year’s unused limit is gone forever.

 

Follow us on social media for more Tax Tips Tuesdays