??Top 5 Financial Planning and Tax-Saving Strategies for High-Net-Worth Investors in 2025
Catherine Valega
?? Financial partner to active women execs, biz owners, + LGBT ????? community. Mother of 4 daughters. Nature lover, adventure-seeker, hiker, crossfitter, and animal-lover. ????
As we move into 2025, it’s a great time to reassess your financial planning strategy to ensure you’re maximizing your retirement savings, aligning your investments with your goals, and taking full advantage of new opportunities.
??Top 5 Financial Planning and Tax-Saving Strategies for High-Net-Worth Investors in 2025
1?? Increase My Maximum Retirement Plan Deferrals (New Contribution Limits for 2025!)
The IRS has increased the contribution limits for retirement plans once again in 2025, and if you’re not maximizing them yet, now’s the time to do so!
401(k) and 403(b) Plans: The maximum employee deferral contribution is $23,500, up from $23,000 in 2024. And if you’re 50 or older, you can still contribute an additional $7,500 in catch-up contributions—bringing the total to $31,000 if you’re over 50.
If you're between the ages of 60-63, you can contribute an ADDITIONAL $11,250 as a catch-up contribution.This means those 50 to 59 or 64 or older will be able to contribute up to $31,000 in 2025 and those 60 to 63 will be able to contribute up to $34,750 in 2025.
IRAs: The limit for contributions to a traditional or Roth IRA has increased ton $7,500 (up from $6,500 in 2024), with the catch-up contribution for those 50 and older still at $1,000.
??Note: These limits apply to employee deferrals, and don’t include any employer contributions. So, the employer match is extra savings, which is always a bonus!
?????? And if you're a business owner, lets discuss implementing YOUR retirement savings plan.
2?? Review My Personal Goals, Resources, Time Horizon, and Investment
Objectives and Investment strategies evolve over time as goals and circumstances change. So, how should you allocate your assets in 2025? Of course every client is different, that is why when you work with us we develop your bespoke wealth and tax management strategy.
But in general terms:
Goals within 3 years:
Keep it liquid. If you have short-term goals, consider placing your money in high-yield savings accounts or short-term CDs to maximize interest while keeping your funds easily accessible. The market is offering some competitive rates, so it’s worth shopping around.
Goals within 3-5 years:
It’s a great time to consider adding some stock exposure, especially through ETFs. Diversifying with a mix of stocks and fixed income helps balance risk and return for this mid-term horizon.
Goals longer than 5 years:
With a longer time frame, you can take on more risk. Equities(stocks) generally provide higher growth potential over time, so this is where higher percentages of stock exposure may be appropriate. Even if the market dips in the short term, a long-term horizon gives you time to ride out volatility.And if you are anbsp;high-net worth investornbsp;whose total net worth is over $10mm we like to discuss additional sophisticated strategies including alternative investments.
3?? Get Familiar with the Newest Updates in Secure Act 2.0
The Secure Act 2.0 brought some game-changing opportunities for retirement planning, and it’s worth reviewing these updates to see how they may benefit you:
Roth SEP IRAs:
Small business owners can now make Roth contributions to their SEP IRAs, which was previously only available for pre-tax contributions. This offers more flexibility for tax planning and can help mitigate future tax burdens.
Employer Roth Matching:
If you contribute to a 401(k), you can now elect for your employer’s match to be made as Roth contributions, meaning they’ll grow tax-free. You’ll pay taxes on them now, but they won’t be subject to vesting.529 to
Roth IRA Conversions:
Have a 529 plan for a child’s education? If the plan has been open for at least 15 years, you can transfer unused funds to a Roth IRA in the child’s name— which helps them set up a future retirement nest egg AND reduces the stress of wondering, What if I fund a 529 plan and my child chooses another route, or gets outside funding, and those assets are not used for education?
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Required Minimum Distributions (RMDs):
If you’re born in 1960 or later, your RMDs now don’t start until age 75. This gives you more time to grow your savings and consider Roth conversion strategies before required distributions kick in. This is a strategy we like to discuss with many of our clients - no matter their age and current income and assets.
SEP IRAs for Household Employees:
You can now set up a SEP IRA for household employees like nannies, which is a great opportunity for those with domestic staff to help them save for retirement.
Qualified Charitable Distributions (QCDs):
You can make charitable donations from your IRA starting at age 70?, which is a powerful tax strategy, especially if you’re charitably inclined.
4?? Review My Long-Term Care (LTC) Funding Plan
Planning for long-term care (LTC) is a crucial part of any comprehensive financial strategy, and Secure Act 2.0 includes a helpful new provision:
Penalty-Free LTC Distributions:
You can now take penalty-free withdrawals from your retirement account to fund long-term care insurance (up to $2,500 per year or 10% of your vested retirement account balance, whichever is less). This makes it easier to allocate funds for LTC needs without tax penalties.
Even if you’re younger, it’s never too early to consider long-term care options. Many high-net-worth clients are more proactive about this planning, especially after seeing loved ones face the high costs of care.
There are various LTC policies to choose from, and if you’re not eligible for one, there may be other alternatives that work better for you.I discuss long-term care insurance with all of my clients. I know many of us have experienced first-hand or second-hand the results of a long-term health event in loved ones - and we are even more aware of the importance of planning for the costs of the great care that we (and our loved ones) deserve!
5?? Schedule My Annual Financial Review to Address 2025 Goals!
It’s always a good idea to review your financial strategy with a professional at least once a year. The beginning of the year is an ideal time to ensure you’re on track for your long-term goals.We can reassess everything from your tax planning and retirement savings to your estate plan and insurance coverage.
Let’s connect soon to ensure your 2025 strategy aligns with your evolving objectives and take full advantage of the tax-saving strategies available this year.
???♀? 2025 Investment, Tax, and Estate Planning Themes Were Watching
As number nerds, we are always learning about trends in the market, updates in tax planning, new investment opportunities, or wealth management techniques to implement for our clients.
Here are some of the themes were especially interested in this year:
?? Bespoke Wealth and Tax Management Boutique
While many ‘advisors’ offer only investment management, our bespoke comprehensive wealth and tax management services include:
?????? ?????? ?? Calling Boston Area Women in STEM!
We are so excited to launch a Monthly In-person Networking Group for Boston-area Women in STEM, aka our Finovate Network!Throughout the year we’ll have programming in addition to meeting other women in STEM professions, including: leadership coaching, career coaching, LinkedIn profile reviews, renewal of headshots, etc.
Save the date: Friday, January 31, 2025, 8am – 9am