As you prepare for the year ahead, now is a great time to assess your financial plan. With this checklist of 10 key steps, you can be ready to handle the challenges and opportunities of 2025.
1. Review Your Investment Strategy
After several strong years in the stock market, investors face both opportunities and risks in 2025. Factors like the dominance of a few large U.S. tech stocks, the strength of the U.S. dollar, global trade shifts, and interest rate trends could all impact your strategy. Policy changes from the new administration may also play a role.
To navigate the year effectively, consider balancing short-term adjustments with a well-diversified, long-term investment approach. Start the year by reviewing your portfolio and asking these key questions:
- How do my current investments compare to my target allocations? Should I rebalance?
- Are my cash reserves at the right level?
- Are there any new investment opportunities in bonds, private equity, or other alternatives based on recent market trends?
2. Maximize Retirement Contributions
Make sure you are taking full advantage of retirement savings opportunities. Here are the updated contribution limits for 2025:
- 401(k), 403(b), and 457 plans: Up to $23,500 in contributions, plus an extra $7,500 for those aged 50–59 or 64 and older. Those aged 60–63 can contribute an additional $11,250.
- IRAs: Up to $7,000, plus an extra $1,000 for those over 50.
- Health Savings Accounts (HSAs): Up to $8,550 for families or $4,300 for individuals, with an additional $1,000 for those over 50.
3. Make the Most of Yield Opportunities
Savers and investors have many options to earn yield without taking on unnecessary risk. Brokerage money market funds often offer higher returns than traditional checking and savings accounts. Be mindful of FDIC and NCUA insurance limits when holding cash in bank accounts.
While higher interest rates make cash holdings more attractive, it is important to maintain a balanced approach. For funds beyond your emergency savings, stocks, bonds, and other investments may offer better long-term returns, especially if the Federal Reserve lowers short-term rates.
4. Strengthen Cybersecurity Practices
Online scams and cyber threats are growing, especially with advances in artificial intelligence. Protect yourself and your family by following strong cybersecurity habits. Parents should also teach children safe internet practices.
If you manage your finances through a single or multifamily office, make sure security policies are regularly reviewed and updated to address evolving threats.
5. Reassess Your Insurance Coverage
Review your property and casualty insurance to confirm you have adequate coverage. If you own coastal property, be aware of potential changes in insurance availability and costs. Check with your agent to avoid surprises at renewal time.
Also, review your personal umbrella policy to ensure your coverage limits are sufficient. Make sure assets like ATVs, boats, and rental properties are properly listed.
6. Evaluate Education Savings Plans
Regularly review education savings accounts to ensure they align with your child’s future plans. College costs continue to change—some schools are raising tuition, while others are adjusting costs to maintain enrollment. Staying informed will help you make the best funding decisions.
The Secure Act 2.0 introduced a new option for 529 plan holders starting in 2024. Excess funds in these accounts may now be transferred to Roth IRAs under certain conditions. However, IRS guidance and state-level approvals are still pending, so stay updated on the details.
7. Review Estate Planning Documents
Ensure your estate plan reflects your current wishes. Focus on reviewing the individuals named in key roles:
- Executor and trustee
- Financial power of attorney (to handle finances if you are unable to)
- Medical power of attorney (to make healthcare decisions if needed)
- Guardian and conservator for minor children
If you own a business, review your buy/sell agreements to ensure they still make sense given your current business and ownership structure.
8. Utilize Estate Planning Strategies
If you want to transfer wealth while managing estate tax exposure, take advantage of tax-free options such as:
- Annual exclusion gifts: Up to $19,000 per person in 2025.
- Medical expenses: Unlimited if paid directly to the provider.
- Education expenses: No limit if paid directly to the institution.
9. Plan for Gift Tax Exemptions
Following the 2024 election, experts anticipate a lower likelihood of the estate and gift tax exemption being cut in half in 2026 as previously scheduled. However, if you are considering wealth transfers to reduce future tax liabilities, acting sooner rather than later could be beneficial.
If you have already used your full exemption in past years, note that inflation adjustments provide an additional $380,000 per person for 2025. Consult your advisor for guidance.
10. Review Your Charitable Giving Plan
If you have a donor-advised fund, review your balance and decide how much you want to donate this year. Having a clear plan makes it easier to distribute funds efficiently throughout the year.
Be Proactive with Your Financial Plan
As 2025 begins, taking a proactive approach to financial planning can help you stay prepared for whatever comes your way. Reviewing and adjusting your strategy now can ensure your financial plan remains effective.
