January marks Financial Wellness Month and is a golden opportunity to take control of your financial health.   For most, the beginning of a new year represents new goals, heightened motivation to achieve those goals, and an increased desire to reign supreme as the champion of your space.   This means, of course, that January is an ideal time to evaluate financial goals and strategize how to enhance financial stability and financial independence.    2025 will undoubtedly introduce new challenges and opportunities, including legislative and regulatory changes, which are expected to have a significant impact on individuals’ tax situations, offer increases in savings’ thresholds for retirement and other tax-deferred accounts, and requirements surrounding employer-sponsored retirement plans.   And as we have seen since the late 1990s, the rapid advance of technology also offers new challenges and opportunities; 2025 is expected to be even more transformative as new budgeting tools and AI-powered investment platforms become more mainstream.   We hope this guide highlights a few areas to focus on to ensure solid financial grounding in 2025 and beyond.     

Enhance Your Health Savings

It is vital to leverage the benefits of a Health Savings Account (HSA) this year.   To demonstrate how important, keep these statistics in mind:

• Using current dollars, the per capita healthcare cost in 2000 was $4,541 per year.   In 2023, the per capita healthcare cost was $14,570 per year

• The Centers for Medicare & Medicaid Services estimates that in 2023, US healthcare spending reached $4.9 trillion dollars; put another way, healthcare spending was 17.6% of overall GDP (US GDP in 2023 was $27.36 trillion)

Understanding that the rising cost of healthcare is a complex and multi-dimensional topic, the simple mathematical comparison highlights that Americans continue to spend more every year on healthcare.   For the tax year 2025, the annual HSA contribution limits are:

• $4,300 (single filers) &

• $8,550 (married filing joint)

The two aspects of HSAs that are the most powerful are (1) they provide triple tax advantages —tax-free contributions, tax-deferred growth, and tax-free withdrawals for qualified medical expenses. And (2) HSA dollars can be rolled over from previous years to future years, unlike flex-spending accounts (FSAs).  

The final point to ponder is utilizing an HSA for future healthcare costs.   Fidelity releases an annual “Healthcare Report” that features updated figures and estimates for what an individual or a couple may expect to pay out-of-pocket for healthcare expenses.   In 2024, Fidelity estimated that a healthy, 65-year-old couple who retired in 2024 will need at least $330,000 to cover medical expenses throughout their retirement years.   Note that this does not include long-term care expenses; rather, the $330,000 figure only represents costs that Medicare and any advantage or supplemental plans will not cover.   Fidelity also projects that the growth of healthcare costs in retirement will increase by 5.6% annually through 2032.  

Take Note of the 401(k) Automatic Enrollment Under SECURE 2.0

SECURE Act 2.0 will continue to change the employer-sponsored retirement plan landscape for many years in the future; however, what is most notable for 2025 as it pertains to SECURE 2.0, is the “auto-enroll” mandate for employees.   In other words, employers must adopt the provision that until or unless an employee makes a voluntary decision to opt out of participating in their employer’s 401(k) or 403(b) retirement plan, employees are automatically enrolled in the plan.   Each plan will differ somewhat, but the automatic enrollment rate is a minimum of 3% of pay but not more than 10% of compensation.   The mandate also articulates an increase of 1% on the first day of each plan year until the 10% contribution rate has been reached but cannot be more than 15%.   Note that SECURE 2.0 lists a few exceptions to this mandate, including:

• Governmental or church plans

• SIMPLE 401(k) plans

• Small businesses with 10 or fewer employees

• Newly established businesses that have existed for <3 years

Keep in mind that some individual states have additional statutes and rules around requiring small businesses to offer their employees a retirement savings vehicle that may have more stringent mandates than SECURE 2.0.   If you have a complex and/or nuanced situation, it is recommended that you seek competent legal and/or tax advice.  

This requirement is designed to boost plan participation since there are valid concerns about the number of employees who have little to no retirement savings and intend to rely on the already-strained Social Security pension benefit.   The auto-enroll feature is particularly beneficial if you work for an employer who matches or contributes a percentage of your compensation to your account.

Leverage New Tech Tools

In 2025, explore innovative financial technology to streamline your fiscal management. Budgeting apps and AI-powered investment platforms may offer personalized financial guidance. Experiment with different tools to find what fits your needs best, aiding in organization, expense tracking, and achieving financial goals efficiently throughout the year.

Plan for Higher Retirement Account Catch-Up Contributions

Another provision of the SECURE Act 2.0 is the ability for older employees to contribute more to their retirement accounts.   In sum, the IRS places limits on how much employees can contribute to their retirement accounts; in other words, how much you can save in the present that will delay providing the IRS their tax payment (assuming you’re contributing on a “pre-tax” basis).   In realizing that too few employees have too little saved for their retirement years, SECURE 2.0 provided higher “catch-up” contributions.  

For employees up until the age of 50, the maximum dollar amount that can be contributed for 2025 is $23,500.   However, and assuming your plan offers “catch-up” contributions, employees aged 50 & older can contribute an additional $7,500 per year, for a total of $31,00 for 2025.   Lastly, employees between the ages of 60 - 63 can contribute an additional “catch-up” amount of $3,750 for a grand total contribution for 2025 of $34,750.  

Taking advantage of these higher limits is crucial for bolstering retirement funds during the pre-retirement stage. Factor this into your financial plans.

Prepare for Potential Tax Changes in 2026

With the expiration of the Tax Cuts and Jobs Act (TCJA) on December 31, 2025, it would be wise to anticipate changes in tax law and the Internal Revenue Code (IRC) in 2026.   Features such as tax rates, deductions (including the standard deduction), and credits are likely to shift, so planning to minimize tax liability should be a focus in 2025.   Other key elements that have an unknown future include the return of the alternative minimum tax (AMT), adjustments to state and local tax deductions (SALT), and the expiration of the 20% pass-through deduction (QBIs). Consulting a tax professional such as a CPA or an EA is advised to navigate and mitigate these impacts.

Financial Wellness Month is your chance to reassess personal finances and future preparations for financial independence. Stay informed about legislative changes, retirement planning, tax readiness, healthcare savings, and tech adoption. Routine and methodical proactive steps today can profoundly impact your financial security and success.   Be sure to review your financial plans, explore new tools, and/or consult a financial professional to optimize your financial health for 2025.