The 2025 Year-End Review: A Financial Checklist for Pre-Retirees
Derrick stared at his computer screen, scrolling through his 401(k) statement one more time. At 61, with his planned retirement just 4 years away, he knew this wasn’t just another year-end review. Every decision he made before December 31 could impact his retirement security for decades to come. Where should he start? What moves could truly make a difference?
If you’re approaching retirement, you’re likely feeling similar pressure. The final months of 2025 represent your last chance to optimize this year’s financial strategies and position yourself for a secure retirement.
A systematic approach to year-end planning can potentially save you thousands in taxes and add tens of thousands to your retirement nest egg.
Maximize Your 2025 Retirement Contributions
Time is running out to make the most of 2025’s contribution limits. For 401(k) plans, the contribution limit is $23,500, with an additional $7,500 catch-up contribution for those 50 and older. If you’re between ages 60-63, you can contribute an even higher catch-up amount of $11,250.
Don’t forget about IRA contributions. You have until April 15, 2026, to make 2025 IRA contributions, but traditional IRA contributions can provide immediate tax benefits if you qualify. For 2025, the contribution limit remains $7,000, with an additional $1,000 catch-up contribution for those 50 and older.
If your employer offers a Health Savings Account (HSA), these provide triple tax benefits and excellent retirement planning tools. For 2025, contribution limits are $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution for those 55 and older.
Review and Update Your Investment Allocation
As retirement approaches, your investment strategy should shift to a more balanced approach that provides both income and some continued growth potential. The traditional rule of holding your age in bonds (for example, a 60-year-old holding 60% bonds) has evolved with longer life expectancies and low-interest rate environments.
Review your 401(k) investment options and rebalance if necessary. Pre-retirees may become too conservative too early, potentially limiting their portfolio’s ability to maintain purchasing power over a 20-to-30-year retirement.
Healthcare and Medicare Preparation
If you’re approaching 65, Medicare enrollment becomes critical. Review your current health insurance coverage and understand how it coordinates with Medicare. If you’re planning to retire before 65, you may need bridge coverage until Medicare begins. However, this type of coverage can be expensive.
Long-term care planning becomes increasingly important as you approach retirement. Consider whether long-term care insurance makes sense for your situation, as premiums increase significantly with age and health changes.
Estate Planning Updates
The end of the year is an excellent time to review and update estate-planning documents. Review beneficiary designations on all retirement accounts, life insurance policies, and financial accounts. These designations override wills, making accuracy crucial. Consider whether your current designations reflect your wishes and family situation.
If you haven’t updated your will, powers of attorney, or healthcare directives recently, now is the time. Family situations change, state laws evolve, and your wishes may have shifted since these documents were created.
Create Your 2026 Retirement Budget
Use the final months of 2025 to develop a realistic retirement budget. Track your current expenses and categorize them as essential (housing, utilities, food, insurance) versus discretionary (travel, entertainment, hobbies).
Many retirees find that some expenses decrease (commuting, work clothes, retirement contributions) while others increase (healthcare, travel, hobbies).
Your December Action Plan
“The end of the year represents your final opportunity to implement strategies that can significantly impact your retirement readiness,” says Glenn Werner, Vice President of Investments at David Lerner Associates.
“Pre-retirees who take action in these final weeks often save thousands in taxes and add substantial value to their retirement security. The key is to create a systematic approach and to not let the holidays derail your financial priorities.”
Create a specific timeline for year-end actions:
- Before December 15: Maximize 401(k) contributions, complete Roth conversions, implement tax-loss harvesting.
- Before December 31: Make final investment allocation adjustments, complete charitable giving, finalize tax planning strategies.
- Early January 2026: Schedule meetings with financial counselors, review and update estate-planning documents, begin Medicare planning.
The transition to retirement represents one of life’s biggest financial shifts. The planning you do in these final weeks of 2025 can set the stage for decades of financial security and peace of mind.
Material contained in this article is provided for information purposes only. It is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. These materials are provided for general information and educational purposes, based on publicly available information from sources believed to be reliable. We cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. The subject of this article is fictitious and created for illustrative purposes only. It is based on events of a similar nature and should not be interpreted as a direct depiction of any specific individual, organization, or incident. Any resemblance to actual persons, living or deceased, or actual events is purely coincidental.