Year-End Retirement Checklist: Preparing for 2025 and Beyond
As we approach the end of 2024, it’s a good time to check-in on your retirement plan. Whether you’re looking to update your strategy or simply reflecting on the year, it’s important to assess your progress. A little planning now could help you prepare for 2025 and beyond.
Determine Where You Stand
Take a moment to assess whether you’re saving as much as you planned for your retirement. Are you maximizing your contributions to your employer-sponsored retirement plan (like a 401(k)) or your Individual Retirement Account (IRA)? Have your retirement goals changed, perhaps due to increased living costs, medical expenses, or other factors?
To find out if you're on track, consider working with a Financial Advisor, who can help you determine if you’re saving enough, given your retirement goals.1 In our opinion, it may be helpful to consolidate any retirement accounts from past jobs, so you have a clearer picture of your progress.
Consider Increasing Your 401(k) Contributions for Next Year
Many 401(k) plans allow you to automatically increase your contribution by 1% at the end of each year. This small boost may seem insignificant but can compound over time to help grow your savings.(2)
One suggestion we have is if your employer doesn’t offer automatic increases, you can always increase your contributions manually.
Consider Maxing Out Your IRA Accounts
Both traditional and Roth IRAs have annual contribution limits. The 2024 limits are as follows:
$23,000 for 401(k), 403(b), 457, and Thrift Savings Plans.
If you’re 50 or older, you can contribute an additional $7,500 for a total of $30,500.
$7,000 for IRA contributions, with an additional $1,000 catch-up contribution if you’re 50 or older, bringing the total to $8,000.(3)
You can contribute to both a 401(k) and an IRA in the same year. Additionally, if you haven’t yet considered the benefits of a Roth account, it may be worth exploring.(3)
SECURE 2.0 Act Changes
The SECURE 2.0 Act, passed in 2022, recently made several important updates that could affect your retirement strategy.(4)
Required Minimum Distributions (RMDs): Starting in 2023, the age at which you must begin taking RMDs from your retirement accounts increased from 72 to 73. This change gives you an extra year to delay withdrawals from your tax-deferred savings.(4)
Penalty Reductions: As of January 1, 2023, the penalty for failing to take your RMD has been reduced. If you miss an RMD, the penalty will drop from 50% to 25% of the amount not withdrawn. If you correct the mistake quickly, the penalty can be further reduced to just 10%.(4)
Roth 401(k) Changes: Starting in 2024, Roth accounts in workplace retirement plans will be exempt from RMD requirements. This means you won’t have to take mandatory withdrawals from your Roth 401(k) in retirement.(4)
Catch-Up Contributions: SECURE 2.0 also introduced higher catch-up contributions for workers over 50. For example, starting in 2025, individuals aged 60–63 will be eligible for a $10,000 contribution, allowing them to contribute an additional $2,500 to their workplace retirement accounts.(4)
Closing Thoughts
Whether you’re just starting to think about retirement or you’re only a few years away, it's important to revisit your financial plan as the year ends. Small adjustments to your contributions, investment strategy, or risk tolerance now may have a positive effect down the road.
If you feel uncertain about your plan or are unsure if you’re on track, consider speaking with a Financial Advisor.
Article Sources:
(1) Suknanan, Jasmin. “Use this year-end checklist to make sure you’re on track with your retirement savings goals.” CNBC, July 30, 2023.
(2) Hunt, Dan. “A Simple Six-Step Retirement Checkup.” Morgan Stanley, April 16, 2024.
(3) Coxwell, Kathleen. “Your Year End Retirement Checklist: Put 2024 Behind You and Prepare for a Great 2025 and Beyond.” Boldin, November 14, 2024.
(4) Fidelity Viewpoints. “SECURE 2.0: Rethinking retirement savings.” Fidelity, November 20, 2023.