If you’re ready to focus on retirement in 2025, early January could be the perfect time to boost your 401(k) plan contributions, financial experts say. 

More than half of American workers feel they are behind on retirement savings, according to a Bankrate survey that polled 2,445 U.S. adults in August.

But starting in 2025, your 401(k) plan has a higher contribution limit — and a special catch-up for older investors — which could help grow your nest egg.

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For 2025, you can defer $23,500 into your 401(k) plan, up from $23,000 in 2024. Investors aged 50 and older can make catch-up contributions of $7,500 on top of the $23,500 limit.

Typically, it takes a couple of paychecks for 401(k) deferral changes to go into effect, according to Boston-area certified financial planner Catherine Valega, founder of Green Bee Advisory.

Boosting your contribution to max out deferrals can be easier earlier in the year because the higher percentage is spread across more paychecks.

“Be aggressive with your investments, especially if you have decades until retirement,” said Valega, who urges clients to max out their 401(k) plans if possible.

Starting in 2025, there’s also a special catch-up limit for investors aged 60 to 63, thanks to a change enacted via Secure 2.0. Instead of $7,500, this group can save $11,250 for catch-up contributions, which brings their total deferral limit to $34,750 for 2025. 

While many investors aim to max out 401(k) deferrals, it can be difficult with other short-term goals, like paying off debt or buying a home.

To that point, roughly 14% of employees maxed out 401(k) plans in 2023, according to a 2024 Vanguard report, based on data from 1,500 qualified plans and nearly five million participants.

Max contributors were typically older, with higher income and a longer tenure with their current employer, the report found.  

Ultimately, you should defer “as much as you feel comfortable” not tapping until retirement, said CFP George Gagliardi, founder of Coromandel Wealth Strategies in Lexington, Massachusetts. Otherwise, you could owe a 10% penalty and taxes for early withdrawals, with some exceptions.     

Plus, you need a “sufficient emergency fund” outside of your retirement savings, he said. 

Typically, experts recommend a minimum of three to six months of expenses for an emergency fund, depending on your family’s circumstances.  

While the Biden administration withdrew its plans to forgive student loan debt for millions of people, borrowers should look into the many other existing debt cancellation opportunities, experts say.

The U.S. Department of Education posted notices in the Federal Register in December that it was pulling its wide-scale loan forgiveness plans. The Department cited “operational challenges,” and experts say political difficulties likely also played a role.

Republican-led states have filed lawsuits to stop nearly all of President Joe Biden’s previous efforts at eliminating education debt. Meanwhile, President-elect Donald Trump is a vocal critic of student loan forgiveness, and on the campaign trail called Biden’s attempts “vile” and “not even legal.”

As a result, at least for the foreseeable future, federal student loan holders should not expect a wide-scale debt forgiveness policy, experts said.

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There is good news, however. There are a still a number of more targeted student loan forgiveness programs available to individual borrowers.

The U.S. Department of Education’s income-driven repayment plans can be a great option for borrowers with worries about how to pay their bills and hopes for eventual debt erasure, experts say.

IDR plans set your monthly bill based on your income and family size — and lead to loan forgiveness after a certain period, often 20 years or 25 years.

The Biden administration tried to make available a new IDR plan that would have lowered many borrowers’ payments even further compared with the existing plans, and forgiven the debt sooner.

However, that program, the Saving on a Valuable Education plan, is tied up from GOP-led legal challenges and faces an uncertain fate in the upcoming administration.

Still, there are a number of IDR plans that remain open to borrowers.

Borrowers should first check to see if they qualify for the Pay as You Earn Plan, or PAYE, said higher education expert Mark Kantrowitz.

That’s because it tends to be the most affordable option.

For example, your monthly bills can be limited to 10% of your discretionary income and your debt may be wiped out after 20 years. Under the plan, borrowers also make no payments on the first $22,590 of their income as an individual, or $46,800 for a family of four, according to a Dec. 18 press release by the Education Department.

There are several tools available online to help you determine how much your monthly student loan bill would be under different plans.

For now, the Education Department still offers a wide range of student loan forgiveness programs, including Public Service Loan Forgiveness and Teacher Loan Forgiveness, experts said.

PSLF allows certain not-for-profit and government employees to have their federal student loans cleared after 10 years of on-time payments. Under TLF, those who teach full-time for five consecutive academic years in a low-income school or educational service agency can be eligible for loan forgiveness of up to $17,500.

At Studentaid.gov, borrowers can search for more federal relief options that remain available.

Meanwhile, The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.

For example, in California, licensed mental health professionals who work at certain facilities for a set amount of time may be eligible for up to $15,000 in loan assistance.

The Maine Dental Education Loan Repayment Program offers a total of $100,000 in student loan repayment assistance to dentists in underserved areas of the state.

Other state programs may offer forgiveness based on your finances rather than your occupation.

In New York, the Get On Your Feet Loan Forgiveness Program allows certain residents to get up to 24 months of their income-driven repayment plan payments forgiven. Among other qualification requirements, borrowers must have an adjusted gross income of less than $50,000 a year.

Stocks soared in 2024.

Congratulations! After taking a victory lap, it may be time to adjust your portfolio — because those heady returns likely threw your investment allocations out of whack.

The S&P 500, a stock index of the largest public U.S. companies by market capitalization, gained 23% in 2024. Cumulative S&P 500 returns over the past two years (53%) were the best since 1997 and 1998.

Long-term investors generally have a target allocation of stocks to bonds — say, 60% stocks and 40% bonds. But lofty returns for stocks relative to muted ones for bonds may mean your portfolio holdings are out of that alignment, and riskier than you’d like. (U.S. bonds returned 1%, as measured by the Bloomberg U.S. Aggregate Bond Index.)

This makes it a good time for investors to rebalance their portfolios, financial advisors said.

Rebalancing brings a portfolio in line with investors’ long-term goals, ensuring they aren’t over or underweighted “inappropriately” in one particular asset class, said Ted Jenkin, a certified financial planner based in Atlanta and member of CNBC’s Financial Advisor Council.

“Every car should get an alignment check in the beginning of the year and this is nothing different with your investment portfolio,” said Jenkin, co-founder of oXYGen Financial.

Here’s a simple example of how portfolio rebalancing works, according to Lori Schock, director of the Securities and Exchange Commission Office of Investor Education and Advocacy.

Let’s say your initial portfolio has an 80/20 mix of stocks to bonds. After a year of market fluctuations, the allocation has changed to 85% stocks and 15% bonds. To return the mix to 80/20, you can consider selling 5% of your stocks and using the proceeds to buy more bonds, Schock said.

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“Set your targets for each investment — how much you’d need to grow your money to be satisfied, and how heavy each investment should be relative to the rest of your portfolio,” said Callie Cox, chief market strategist at Ritholtz Wealth Management.

“If the allocation gets too big or small, consider buying or selling to get your money back in balance,” she said. “Wall Street portfolio managers do this on a regular schedule. It’s a prudent investing exercise.”

The so-called “Magnificent 7” megacap tech stocks — Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla — accounted for more than half of the S&P 500’s total gain in 2024. The Nasdaq, a tech-heavy stock index, swelled almost 29%.

Non-U.S. stocks “continued to underperform,” returning about 5% last year, according to experts in Vanguard’s Investment Advisory Research Center.

“Right now, I think it’s smart to review your tech investments and think about taking some profits,” Cox said. “Tech rules our lives, but it doesn’t always rule our portfolios.”