Better Financial Health in 15 Minutes (or less!)

Retirement Reset: Maxing 401(k)s, Smart Withdrawals, And The New Rules

• Stacey Hyde

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Big changes are here for savers and retirees, and they’re easier to navigate than you think. We walk through the 2025 retirement reset with clear contribution limits, what the super catch-up really means for ages 60 to 63, and how to balance Roth and pre-tax choices without leaving money on the table. You’ll hear a grounded view on returns going forward—why large-cap U.S. stocks may sit closer to 4.5 to 6 percent and why bonds finally deserve a seat back at the table with 4 to 5 percent potential.

From there, we get practical about turning portfolios into paychecks. The classic 4 percent rule still works as a starting point, but inflation and volatility call for guardrails. We outline flexible withdrawal tactics, cash and short-bond buffers, and how to avoid selling stocks in a downturn. If you’re retiring early or bridging to Medicare, we share ways to pace withdrawals without blowing up your plan.

We also break down Social Security decisions with the latest COLA, rising Medicare premiums, and a realistic break-even window in the mid-to-late 70s. If longevity runs in your family, delaying can pay off; if you’re not working, you may blend strategies to manage taxes and risk. To wrap, we give you a no-nonsense year-end checklist: bump savings by one to two percent, rebalance from winners to laggards, verify your Social Security earnings, and right-size your emergency fund to today’s expenses.

If this helped you reset your plan, follow the show, leave a quick review, and share it with a friend who needs a 15-minute financial tune-up.

Envision Financial Planning. 5100 Poplar Avenue, Suite 2428, Memphis, TN 38137. (901) 422-7526. This communication is strictly intended for individuals residing in the United States. Advisory Services offered through Envision Financial Planning, a Registered Investment Adviser.

SPEAKER_00:

Hi, I'm Stacy Haydn. I want to welcome you back to Better Financial Health in 15 minutes or less, the podcast where we try to keep you sharp enough with your finances that you can cut through all the turkey leftovers. Okay, that was a terrible mon joke. I will stop and get back to what we want to talk about today, the 2025 retirement reset. A lot has changed this year while you probably weren't looking. So let's um get to it. There's a big change that happened this year called the One Big Beautiful Bill, and we'll talk about that a little bit. We've talked about it before, but I just want to remind you as we finish up the year, the 2025 um retirement limits for your retirement plan. Um you really try want to try to get to these if at all possible. Um 23,500 is the maximum in your 401k. That can either be pre-tax or Roth or some combination. If you're fifth year older, you can put in an extra 7,500. And this year, also either pre-cax or Raw. There was also, this was the first year, the super catch-up. If you were 60 to 63 this year, caveat, if you turn 64 this year, you can't do it, it doesn't apply. You can do an extra$11,250, not the$7,500. That's a key point of information because you don't get$7,500 plus$11,250, you get either or. So if you're over$50 but not in that uh four-year window, your catch up is$7,500. If you're in that 60 to 63 and your employer has allowed it, there's an extra$11,250 you can do. If you're making IRA contributions, that's$7,500. And if you're over$50, you can put in an extra$1,000. Just like with the 401k, that is a combined limit. So you can either do a pre-tax if your income allows, or raw up to that$7,500 limit, but you can't put the full amount into both. If you want to do both, you have to split it. So HSA contributions are still available. Um, you can't change those. Generally, you make those you made those last year during open enrollment. So kind of the quick math, if you are over H50, you can put in 31,000 into your 401k this year or 34,750 if you fall into those groups. I think the more interesting thing right now is we're coming into the year and getting ready for 2026. Um the IRS has recently released the new limits for next year. So under 50, it's 24,500. Over 50, there's that extra 8,000. The super catch up is still 11,250. So that's what you need to be looking at for next year. I think the market reality that we're seeing right now is that someone just asked me today. They said, you know, I'm looking to work about eight more years and I'm projecting my accounts at 8%. Do you think that that's a conservative rate? And I said, well, if you're looking backwards, absolutely, because over the last 15 years, equities have done way better than that. But going forward, I think that you need to be looking at large cap US stocks doing four and a half to five and a half, maybe six percent, small caps a little more. But the big change from really the last 15 years is that I think for your bond returns, you can project it a four to five percent. That's kind of the upside to these higher interest rates. They're finally earning something again. So, and that helps because most people, when they're retired, don't want to be in all stocks. The volatility when you're living off your investments, that volatility can be very damaging. And so it was really hard when interest rates were at 1.3 percent. So, what does that do to our sort of 4% rule as far as safe withdrawal rates? It's I think it doesn't change it a lot. I think you it does require us to be a little more judicious about where we pull from. And also with inflation being higher, and I don't think most people realize the 4% rule also assumes that you increase that withdrawal each year for inflation. Well, when inflation was nothing or 1%, that wasn't a big deal because it wasn't going up much each year. Now, with inflation being much higher, that can cause your withdrawals to really increase pretty rapidly. And so the safe withdrawal might be a little bit lower. But I still think the starting point is still a good one at the 4%. But you also need to know that if you're wanting to push the envelope and maybe take out five or six, seven percent because you've retired early and you've got to pay for health care before you get to Medicare. Um, you need to be a little bit flexible in case markets are not your friend to because you don't want to sell stocks when things are down. Not a fun thing to think about, but it's the truth, it's important to look at it. So security. The COLA for this year, for they've announced it from 2025, the increase going into 2026 will be 2.8 percent. The bad news is they also announced the Medicare rate increases and they're going up quite a bit too. So just keep in mind if you claim it's 62 instead of full retirement, your benefit's gonna be reduced about 30 percent. If you wait to 70, your benefit's gonna be increased by about 24 percent, and the break-even rate is somewhere, depending on what um discount rates you use, anywhere from like 75 to 80 in that range. So if longevity runs in your family or your wife's family or husband's family, delaying might be a good move. If you're not working anymore, I'm not sure I would recommend waiting all the way to 70. So here's your kind of quick checklist for the end of the year. If you can, go ahead and increase those 401k contributions one to two percent. If on the flip side you're um taking from your portfolio, go and look at it and see if you really need to have it increased next year, if you can stay where you are. Um, if you are managing your own investments, look at rebalancing. That means selling the things that have done really well, aka tech stocks, and buying the stuff that looks really boring, bonds, value stocks, maybe some small company stocks. Also, double check your emergency fund. With inflation being what it is, what used to be three to six months of living expenses may not actually still be that, and you may need to take some money and add to it there. Go ahead and log into your Social Security account, double check those past earnings, what got reported for last year, that that looks correct. It's a lot easier to do it now than when you're getting ready to file for Social Security and figuring out that they missed three years of your earnings. So you want to make sure that you've taken care of that. Also, it's a good time to really look at your risk tolerance, your allocation. You know, maybe you decided that cash and bonds were trash and you weren't going to own any of that. Now, with volatility coming back in, with bonds actually earning good returns, might be a good time to introduce those back into your portfolio. So that's your 2025 retirement reset. Hopefully you've learned a few things, got a few ideas as we enter this last month of the year. And please share the podcast with a friend. We really appreciate it. Leave us a review and send us any podcast ideas you might have. Thanks again. And I hope your holidays get off to a great start.