Planning for 2025

In December I wrote about the top five topics you don’t want to miss for 2024. Each year we talk about end of the year planning, and it is important that you don’t miss important deadlines. Equally important, however, is planning for the new year. It’s vital to your long-term success that each year is started with a solid plan that aligns with your goals and objectives. So, here are the top 5 things to plan for while 2025 is still young. 

1. Creating an annual cash flow statement. This is a critical first step for 2025. Forecast income for 2025 and try to estimate expenses as close as possible to identify net cash flow. If you are a client, log into your OmniCAP, click on the Reports Tab and highlight the Cash Flow Report. This will give you everything with a few clicks of the mouse. How do you feel about the amount of Net Cash Flow? If you don’t feel proud of your savings, now is the time to decrease spending.  

2. Increasing contributions to 401(k)’s and other Employer Sponsored Retirement Plans. This is a common mistake that we see. You might have maxed out your contributions for the limits 5 years ago, but a lot can change in 5 years, or even 1 year. The limits for 401(k)’s have increased in 2025 to $23,500 and $31,000 if you’re over 50 years old. This highlights another great point, if you turn 50 this year, be sure to take advantage of the $7,500 catch up.  

3. If you happen to be 60 – 63, the catch-up contribution is $11,250. That means along with your deferral of $23,500, you can contribute $34,750 in a single year.  

4.  Planning for large expenses. Are there large purchases or vacations that need to be planned for? Now is a great time to acknowledge these purchases and how much you’ll need to set aside for each. Another large annual expense (for some) is vacations. It’s a great time to start planning your vacations and creating a budget for the projected expense.  The sooner you recognize larger expenses for 2025, the better you have a chance of avoiding financial surprises.  

5. Maximizing Roth IRA contributions. Whether you’re funding Roth IRAs directly or if you are initiating Backdoor Roth IRA contributions, the beginning of the year is a great time to make these contributions. It ensures that the contributions aren’t missed throughout the year, when other expenses can steal your attention, and it always feels good to make the contribution a year in advance. This can also be done for HSAs and any other accounts that might be part of your financial goals. 

6. Reflection and Planning. It’s easy to forget how much was accomplished in 2024 and it’s worth taking time to celebrate the victories. Many of our clients did great things in the prior year, and we accomplished some incredible planning. Setting aside time to think about what’s next is a beginning of the year activity that sets the course for 12 months. Don’t forget to keep your goals close by, within eyesight. It’s been said, out of sight, out of mind. If this is a new exercise, try using S.M.A.R.T goals. That acronym stands for Specific, Measurable, Achievable, Relevant, and Time-bound, and it works. Here’s to a great 2025, and the next great accomplishment worthy of celebration.  

I hope you will spend time on each of these points to prepare for 2025 . Of course, if you need any help or if there’s anything your team at OmniStar can do to assist, please don’t hesitate to reach out to schedule a planning session with your advisor. Happy New Year!