Resolve to do a Retirement Plan Check-Up
What if your New Year’s resolution is to do a Retirement Plan Check-Up? It will be worth your time and effort. You always profit from reviewing your retirement plan. Retirement has many possible parts and challenges, and your needs and goals are specific to you.
These subjects may be relevant now or later, depending on whether you are retired or not. Some 2025 stories are still newsworthy. Some retirement stories related to needs and goals are always relevant. On balance, 2025 was a positive year for retirement.
The Big Beautiful Tax Bill became law last summer. Social Security benefits are still taxable but each person age 65 and older in 2025 has a new $6,000 deduction. This will lower income taxes for about 60% of taxpayers. Unfortunately, nothing was done to fix the shrinking Social Security Trust Fund.
The Big Beautiful Bill renewed the existing tax brackets and rates which prevented a substantial income tax increase for the 2026 tax year. The deduction for state and local taxes was increased, and deductions appeared for tips, overtime, and new car loans.
Start your check-up by organizing your 2025 income tax information. Filing your return sooner means you get your refund faster. There is a new charitable giving deduction of $1,000 per person that can be taken when taking the standard deduction, so dig out your documents and receipts.
The Social Security Fairness Act took effect in January 2025. It cancelled past reductions in Social Security benefits for those (and spouses) who worked for government employers that did not contribute to Social Security. Higher monthly checks and back-payments for 2024 started last February.
Look at your spending for 2025, in broad categories. Look at what you spent on the primary categories like housing, food, transportation, healthcare, and insurance. Do you need to adjust for something? The Social Security COLA (cost of living adjustment) for 2026 is 2.8% and it highlights that inflation is still near 3%.
If retired, how do your sources of guaranteed income compare to your necessary spending? What percentage of your retirement savings are you withdrawing for monthly income? Would more guaranteed income stretch the savings you have?
If you are still working, can you increase your retirement contributions? Maximum contributions are higher for 2026. Can you increase your payroll retirement contribution? Do that if you can. Adjusting your contribution early in the year is less of a change. Perhaps contribute to the Roth side of your plan or increase your current allocation to Roth. It is taxable income now and never taxable again.
For those age 73 and older, your Required Minimum Distributions (RMDs) are more complicated today. A Roth account has no RMD. Evaluate the benefits of some Roth Conversion this year. Many do this. If you make gifts to charity, gift by Qualified Charitable Distribution (QCD) instead. It counts toward your RMD if done before making any RMD withdrawal. Also, you need to take all RMDs before doing Roth conversions.
All the best in 2026.
