As we enter 2025, several economic, legislative, and social changes have already been implemented and are poised to impact your finances. Some of these developments provide opportunities for financial growth, while others may present new challenges.
Let’s explore the most important factors to watch when starting 2025 and see how they affect your wallet.
1. How the Trump administration is shaking things up
Presidential politics can have a huge impact on ordinary people’s finances. But it’s unclear what parts of their agenda will be pushed through. Also, policies do not always have the expected results, so it is difficult to predict how management will affect the pocketbook.
- Will Trump’s tariffs cause inflation, strengthen the domestic economy, or both?
- Will stock prices rise if the corporate tax rate is low?
- Will personal tax rates remain low (or get lower) throughout this administration?
- Will Social Security and Medicare continue as they are now?
- Will the Consumer Financial Protection Bureau (CFPB) be dismantled and more professional consumer policies rolled out?
We don’t really know what will happen. Predicting the future can be a game of whac-a-mole.
Preparation method: Know your personal financial goals and have a flexible and evolving plan to achieve them. Boldin Planner is your partner as you change and the world evolves.
2. 401k retirement savings
Good news for retirement savers! Starting in 2025, individuals ages 60 to 63 will be able to make higher contributions to 401(k) and 403(b) plans. This change, part of the Secure 2.0 Act, is designed to help older workers close gaps in their retirement savings.
The 2025 401(k) contribution limit is $23,500, with a catch-up contribution of $7,500 for employees age 50 and older. Employees between the ages of 60 and 63 can contribute an additional $11,250.
explanation
- The $23,500 limit is an increase from $23,000 in 2024
- Catch-up contribution limit remains at $7,500 for employees age 50 and older
- Catch-up contribution limit increases to $11,250 for employees ages 60-63
- Total contribution limit for people 60-63 is $34,750
So if you’re married and both of you are between the ages of 60 and 63, that’s an additional $69,500 that could be saved into your tax account. And that’s even before the employer’s contribution!
How to profit: Saving any amount of money can be difficult, let alone almost $35,000 per person. However, it is worth trying to maximize your contribution if you are eligible. Here are ideas for saving more and explore 15 ways many households can go about saving.
3. Limits on Medicare recipients’ out-of-pocket prescription costs
The Inflation Reduction Act’s CAP for Medicare Part D out-of-pocket drug costs will become fully effective in 2025. Beneficiaries pay less than $2,000 a year for prescription drugs.
How to profit: Check current drug costs and plan options during open enrollment. This cap could provide significant savings to Medicare recipients.
4. High earned income limits for people working while receiving social security
If you take Social Security early and keep working, you can make a little more money before your benefits are cut. The amount you can earn before benefits are temporarily reduced increases slightly from $22,320 to $23,400 in 2024.
How to profit: Reductions in Social Security benefits due to work do not discourage employment. Benefit reductions are temporary, and once you reach full retirement age, Social Security will return the money withheld and put it back into your monthly checks over time.
5. Inherited IRA rules are tightened
The IRS continues to enforce stricter rules for inherited IRAs, requiring most spousal beneficiaries to withdraw all funds within 10 years of inheritance. The exact distribution requirements are confusing, and penalties for missed withdrawals are significant.
How to adapt: The rules are confusing. However, there is a fix. Use Boldin Planner to see the rules that apply to inherited IRAs and see the impact of distributions on your income, tax liability, and more.
6. Medical Debt Relief Initiative
A quarter of all Americans owe money for past medical expenses. The CFPB also estimates that 15 million people have $49 billion on their credit reports.
Recognition of the burden of medical debt has led to legislative efforts to improve financial protection for patients. In 2025, new reporting rules limit how medical debt can affect your credit score, and some states are introducing caps on interest rates on unpaid medical bills.
How to profit: Monitor your credit report and challenge inaccuracies. Explore financial assistance programs or negotiate directly with your provider to manage your medical costs.
7. climate-driven costs
Climate change continues to impact pocket books, including higher insurance premiums, increased repair and heating costs.
How to adapt: Assess your climate-related risks and stay on top of your home insurance costs.
8. debt
There were big financial headlines this week. Last-minute legislation from the Biden administration and a flurry of new policies the Trump administration is enacting. Lost in the shuffle is that the total debt owed by the U.S. government has obscured the $36.1 trillion it is legally allowed to borrow. This sets the stage for a scramble by Congress and the White House and the White House to fix it before the US can’t pay its bills and potentially triggers a financial crisis.
Preparation method: Learn more about the debt ceiling and how to prepare if the government needs to violate the limit.
9. economic indicators
According to the conference committee index Among key economic indicators, the Biden administration ended its term with a solid economy. There was a slight decline in December, but the past six months have been better than the previous year.
And while many economists are wary of the impact of some of his policies, so far the stock market has shown good news for the Trump administration.
How to adapt: Good investment practices suggest that you ignore the headlines, save and invest according to your financial goals.
- Don’t try to tell the future. But stay true to your investment philosophy. (Not sure about your investment philosophy? Create an investment policy statement.)
- Set up contingency plans for various futures
- Stay flexible and adjust your plans as life unfolds
