2025 Retirement Planning Tips: Make the Most of New Opportunities

Transitioning into retirement with absolute confidence that you'll have what you need to live the life you envision is priceless, so you don't want to miss out on these new opportunities. Here are some key strategies to optimize your retirement planning this year. 

Take Advantage of the New "Super Catch-Up" Retirement Account Contributions 

If you're between 60 and 63 years old, you now have a greater chance to boost your retirement savings with increased catch-up contributions. Under the new rules, instead of the standard $7,500 catch-up contribution available to those over 50, you can now contribute an additional $11,250 to your workplace retirement plan. This brings your total possible contribution to $34,750 for 2025 ($23,500 standard contribution plus $11,250 catch-up). 

This "super catch-up" provision represents a significant opportunity to boost your retirement savings during what are typically your peak earning years. Consider adjusting your budget now to take full advantage of this expanded contribution limit while it's available to you. 

Benefit from Automatic Enrollment 

Starting in 2025, most new 401(k) and 403(b) plans are required to automatically enroll eligible participants. Initial enrollment will be at least 3% of your salary (but not more than 10%), with automatic annual increases of 1% until contributions reach at least 10% (but not more than 15%). 

While you retain the ability to opt out or adjust contribution amounts, this "set it and forget it" approach helps ensure consistent retirement saving. If you're starting a new job, be aware of these automatic enrollments and consider whether you might want to increase your contributions beyond the default rates. 

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Part-Time Workers: Earlier Access to Retirement Plans 

Good news for part-time workers in 2025: employees who work at least 500 hours per year for two consecutive years (down from the previous three-year requirement) must be allowed to participate in their employer's 401(k) plan. 

This change benefits those considering phased retirement or working part-time while caring for family members. If you're in a part-time role, check with your employer about your eligibility to start contributing to the retirement plan. 

Rethink Your Tax Strategy 

With expanded contribution limits and potential tax law changes on the horizon, 2025 is an excellent time to review your overall strategy regarding retirement savings and taxes. 

Consider whether pre-tax contributions (traditional plans) or after-tax contributions (Roth options) make more sense based on your current tax bracket and expectations for retirement. The higher contribution limits mean potentially larger tax deductions now, but also consider whether you might benefit more from tax-free withdrawals in retirement through Roth accounts. 

Don't Overlook HSAs as Retirement Savings Tools

Health Savings Accounts (HSAs) remain valuable triple-tax-advantaged retirement planning tools. In 2025, if you have a qualifying high-deductible health plan, you can contribute up to $4,300 for individual coverage or $8,550 for family coverage, with an additional $1,000 catch-up contribution if you're 55 or older.

Consider maximizing these contributions and, if possible, paying current medical expenses out of pocket while allowing your HSA investments to grow tax-free for healthcare costs in retirement.

Review Required Minimum Distributions (RMDs)

Remember that under SECURE 2.0, the age for Required Minimum Distributions (RMDs) increased to 73 in 2023 and will further increase to 75 in 2033. This gives you more time for tax-deferred growth before mandatory withdrawals begin.

If you're approaching RMD age, work with a financial advisor to plan for these distributions in the most tax-efficient manner.

Create a Comprehensive Retirement Strategy

While 2025's enhanced contribution limits provide excellent savings opportunities, effective retirement planning requires a comprehensive approach. Consider working with a qualified financial advisor to:

• Develop a retirement income strategy
• Review your investment allocations
• Assess your estate plan
• Evaluate insurance needs
• Create a tax-efficient withdrawal strategy for retirement

Begin Planning Now

The changes in 2025 retirement savings rules offer significant advantages, but they require proactive planning to maximize their benefits. Start by evaluating your current retirement savings strategy, adjust your budget to accommodate higher contributions if possible, and consider consulting with a financial professional to ensure your retirement plan is optimized for your specific goals and circumstances.

At WHZ, we can partner with you to create a comprehensive financial plan that includes thoughtful retirement planning with strategic use of these new provisions. Contact us for a consultation on our website at whzwealth.com, or give us a call at (860) 928-2341. 

Authored by Principal/Managing Partner Laurence Hale AAMS, CRPS®. AI may have been utilized for initial drafting of this piece. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. WHZ Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259 and 392-A Merrow Road, Tolland, CT 06084. 860-928-2341. www.whzwealth.com. www.whzwealth.com.