Personal Finance
Here’s what should be on your financial to-do list for 2025, advisors say
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When it comes to financial resolutions, paying down debt is at the top of many to-do lists for 2025.
But financial advisors who work with clients every day have their own wish lists for what they think should be top financial priorities for 2025.
Here are some tips covering everything from budgeting to estate planning from experts who are members of the CNBC FA Council.
“Start slow and manageable with any new financial goals,” said Lee Baker, a certified financial planner and founder, owner and president of Claris Financial Advisors in Atlanta. “You’re better off getting some wins under your belt than trying to build Rome in a day only to end up frustrated.”
Make sure your budget aligns with your goals
A new year is a great time to revisit where your money is going.
“A little bit of time spent on understanding your actual spending and then deciding if it lines up with your goals and values is time very well spent,” said CFP Jude Boudreaux, a partner and senior financial planner with The Planning Center in New Orleans.
Ask yourself if your spending aligns with your goals and values and if it should continue, he suggested. Once you sit down and look at the numbers, it can help identify where you might want to make changes.
Bringing awareness to your spending can help ensure that you’re making the most of the money you’re taking in, advisors say.
“Mindful spending that reflects personal values can lead to greater satisfaction and stronger relationships,” said Rianka Dorsainvil, a CFP and founder and senior wealth advisor at YGC Wealth.
Evaluate where you can cut back on spending
While credit card debt has climbed to record highs and consumers still contend with higher prices, it’s a great time to streamline your spending.
The new year is also a good time to review your credit and debit card statements for the year, said Ted Jenkin, a CFP and founder and CEO of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta.
Look for subscriptions, apps and memberships you don’t use and cancel them, he said.
Also be sure to take a look at how much you’re paying for streaming services, and where you might be able to cut back, Jenkin said. Multiple streaming service subscriptions can now add up to more than a cable bill. Families may save by cutting the number of subscriptions or by having multiple family members on one account, he said.
Also be sure to take a look at grocery bills and the tendency to add spontaneous purchases that can add up, Jenkin said.
Create a personal investment policy statement
When the market inevitably has ups and downs, the temptation is to react.
But research shows the market’s worst days are often closely followed by the best days. If you sell during a market drop, you’ll miss the upside.
By creating a personal investment policy statement, you can avoid reacting to what’s happening in the market and instead stay focused on your goals, said CFP Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida.
For example, an investor with a long time horizon before retirement may choose to allocate 80% of their portfolio to equities and the remaining 20% to fixed income. When the market drops or soars, they can choose to rebalance back to that 80% equity allocation rather than give in to the temptation to react to the latest moves, McClanahan said.
Try to negotiate a higher salary
The start of a new year usually provides an opportunity to meet with your supervisor or boss to discuss your achievements and value to your team and company, said Cathy Curtis, a CFP and the founder and CEO of Curtis Financial Planning, a fee-only financial planning and investment advisory firm.
Before that meeting, research your market value and determine what salary or other compensation you want to ask for with a clear, concise pitch on why, Curtis said.
Also be sure to evaluate whether your work may be more highly rewarded elsewhere, she said.
Make sure your estate plan is up to date
One area of financial planning that people tend to avoid is estate planning, according to Louis Barajas, a CFP, enrolled agent and CEO of International Private Wealth Advisors in Irvine, California.
For anyone who has young children or who owns property, it’s particularly important to make sure you complete your estate plan, Barajas said.
Notably, estate planning does not necessarily have to be expensive, he said. For people who have financial situations that are not complicated, there are good online estate planning resources that help prepare wills, trusts, powers of attorney and guardian nominations for minimal costs.
Proper estate planning can help ensure your wishes for where you want your money to go are honored when you die. Importantly, that should also include your digital assets, said CFP Preston Cherry, founder and president of Concurrent Financial Planning in Green Bay, Wisconsin.
“These areas require annual reviews to help account for life and money milestones and adjustments in your value system,” Cherry said.
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Set time to meet with family to discuss money
More than half of Americans — 56% — say their parents never discussed money with them, according to a recent Fidelity survey.
To get a family money conversation going, it helps to set a formal time to discuss the topic.
Lazetta Rainey Braxton, a CFP and founder and managing principal of The Real Wealth Coterie, recommends scheduling at least two multigenerational family meetings per year to discuss intergenerational wealth.
Possible topics that could be discussed include financial resolutions, long-term care needs for older generations and the status of estate planning documents.
If married, make your spouse a priority
A successful marriage is often a predictor of personal happiness, said Tim Maurer, a CFP and the chief advisory officer at SignatureFD, with offices in Atlanta and Charlotte, North Carolina.
If you have a spouse, investing more time and money in your marriage will pay off, he said.
Start with open money conversations, where both spouses answer the questions “What’s working?” and “What could work better?” Maurer said.
It also helps to have weekly standing meetings to discuss calendars and budgets, where you can identify any adjustments that need to be made, he said.
Be sure to create a new budget category that is kept sacred for date nights, and strive to schedule that time together weekly, Maurer said.
Identify key financial deadlines — and start early
Whether it’s getting your tax return in before April 15 or a required minimum distribution before Dec. 31, it helps to get started well before the deadline.
“Think about all the things that come up over the course of the year and plan for it early,” said Baker of Claris Financial Advisors in Atlanta.
“Avoid waiting until the last minute,” Baker said. “You and your advisors will benefit.”
Consider gifting money now
For people who are retired or close to retirement and who have the means, it can make sense to give away money to loved ones now rather than wait, said Boudreaux of The Planning Center in New Orleans.
It provides an opportunity to identify the family’s values, and direct money in alignment with that purpose, Boudreaux said. For example, that could include financial help for adult children who are raising grandchildren now, he said.
In 2025, the annual gift tax exclusion will go up to $19,000 per recipient. However, individuals can still make gifts over that amount by filing a gift tax return with the IRS and counting it against their lifetime gift tax exemption, which will be $13.99 million in 2025, Boudreaux said.
Notably, direct funding for education is not subject to gift tax limitations, he said.
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Retirees can expect to see some big changes in 2025 when it comes to their Social Security and Medicare benefits.
President Joe Biden is expected to sign a bill that will increase Social Security benefits for certain pensioners. Additionally, the annual Social Security cost-of-living adjustment goes into effect for all beneficiaries.
And Medicare enrollees who are worried about health-care costs now have a $2,000 annual out-of-pocket Part D prescription drug cap aimed at helping to reduce those financial pressures.
Here are some important changes to note for the coming year.
Some pensioners could get benefit increase
The Senate passed a bill in the final legislative days of 2024 to boost Social Security payments for millions of people who receive pensions from work in federal, state and local government, or in public service jobs such as teachers, firefighters and police officers. The House had passed the bill in November.
Now, Biden is expected to sign the bill into law in the coming days.
The Social Security Fairness Act eliminates two provisions that reduce Social Security benefits for certain individuals who also have pension income from public work where Social Security payroll taxes were not paid.
That includes the Windfall Elimination Provision, or WEP, which reduces Social Security benefits for individuals who also receive pension or disability benefits from employers who did not withhold Social Security taxes.
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It also includes the Government Pension Offset, or GPO, which reduces Social Security benefits for spouses, widows and widowers who receive their own government pensions.
Together, the rules affect around 2.5 million beneficiaries, according to the Congressional Research Service. Once enacted, the law may provide higher benefit payments to those individuals.
Notably, it may provide retroactive payments of those benefit increases for the months after December 2023.
The legislation marks the biggest change to Social Security since certain couples claiming strategies were phased out in 2016, said Martha Shedden, president of the National Association of Registered Social Security Analysts.
“We’re sort of in limbo as to how that process will proceed, when people will see that increase and how the retroactive [benefits] will be applied,” Shedden said.
All Social Security beneficiaries to get 2.5% COLA
In 2025, all beneficiaries will see a 2.5% increase to their Social Security benefit checks, thanks to an annual cost-of-living adjustment.
Of note, the 2024 increase was 3.2%. This year’s COLA is the lowest increase beneficiaries have seen since a 1.3% increase in 2021, reflecting a decrease in the pace of inflation.
The change will be effective with January checks for more than 72.5 million Americans, including Supplemental Security Income beneficiaries.
The average worker retirement benefit will be $1,976 per month, up from $1,927 in 2024, according to the Social Security Administration.
Monthly Medicare Part B premiums go up
Monthly Medicare Part B premiums — which are often deducted directly from Social Security checks — may affect just how much of a bump beneficiaries see in their 2025 benefit payments.
Medicare Part B covers physician, outpatient hospital and certain home health services, as well as durable medical equipment.
In 2025, the standard monthly Part B premium will be $185 per month — a $10.30 increase from $174.70 in 2024.
Part B deductibles will also rise, to $257, in 2025 — a $17 increase from the $240 annual deductible for 2024.
Medicare Part B premiums are based on a beneficiary’s modified adjusted gross income, or MAGI, from their tax returns from two years prior. In 2025, beneficiaries who had less than or equal to $106,000 in MAGI in 2023 will pay the standard monthly Part B premium, as will married couples with less than or equal to $212,000.
Beneficiaries with higher incomes will be subject to income-related adjustment amounts, or IRMAA, that increase their monthly premium payments.
Medicare $2,000 prescription drug cap goes into effect
Annual out-of-pocket Medicare Part D drug costs will now be capped at $2,000, as changes enacted with the Inflation Reduction Act go into effect.
Beneficiaries with Medicare Part D drug plans that have a deductible will pay out-of-pocket costs until that threshold is met. In 2025, the highest deductible for those plans is $590.
Once beneficiaries pay their full deductible, they will owe 25% of the cost of coinsurance until their out-of-pocket spending on both generic and brand-name drugs reaches $2,000. After that, those beneficiaries will have what’s known as catastrophic coverage, which means they won’t be on the hook to pay out-of-pocket Part D costs for the rest of 2025.
However, beneficiaries will also have the option to pay out-of-pocket costs monthly over the course of the year, instead of all at once.
Notably, insulin costs have also been capped at $35 per month, both under Medicare Part D covered treatments and Medicare Part B covered insulin used with pumps.
Social Security trust fund depletion dates get closer
In 2024, the Social Security trustees projected the trust fund the program relies on to help pay retirement benefits may be depleted in 2033. At that time, just 79% of those benefits may be payable, unless Congress acts sooner.
Social Security’s combined trust funds — used to pay both retirement and disability benefits — are projected to run out in 2035.
Now that the calendar has turned to a new year, those depletion dates are closer.
Notably, the previously mentioned Social Security Fairness Act that will provide increased benefits to some pensioners may move the trust fund depletion date six months closer.
“That’s the major looming issue right now, is what can be done to shore up those trust funds,” Shedden said. “That’s going to require very comprehensive, bipartisan changes to multiple parts of the Social Security rules in the program.”
However, most financial advisors emphasize that shouldn’t affect personal claiming decisions.
For younger generations, there could be changes to future benefits, said George Gagliardi, a certified financial planner and founder of Coromandel Wealth Strategies in Lexington, Massachusetts.
“But for those already receiving or about to get Social Security checks, I don’t think that there is anything to worry about,” Gagliardi said.
Other important changes to note
- Maximum taxable earnings — the amount of wages subject to Social Security payroll taxes — will rise to $176,100 in 2025, up from $168,600 in 2024. Once workers hit that cap, they no longer pay into the program for the rest of the year.
- Social Security beneficiaries who claim benefits before their full retirement age and who continue to work face what is known as a retirement earnings test. The earnings exempt from the retirement earnings test is now $23,400 per year in 2025 for those under full retirement age, up from $22,320 per year in 2024. For every $2 in earnings above the limit, $1 in benefits is withheld. For the year an individual reaches retirement age, a higher threshold of $62,160 in earnings applies, up from $59,520 in 2024. For every $3 in earnings above the limit, $1 in benefits is withheld. Of note: this only applies to the months before a beneficiary turns full retirement age. Starting from their birthday month, the retirement earnings test no longer applies. Importantly, once a beneficiary reaches full retirement age, any previously withheld benefits are applied to monthly benefits.
- Do you want to talk to the Social Security Administration face to face? Starting Jan. 6, the agency is requiring appointments for local office services, such as obtaining Social Security cards. To improve efficiency, the agency is directing individuals who need help to first try its online or automated telephone services. However, people who are unable to schedule in-person appointments, particularly vulnerable individuals, may still come in and get in-person service.
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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.
Catherine Valega
Founder of Green Bee Advisory
“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.
Invest ‘as much as you feel comfortable’
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.
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