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Is 2025 the Year to Retire? 5 Financial Must-Dos Before You Make the Leap
Are you eyeing 2025 as the year you finally trade your daily commute for days spent traveling, relaxing, or chasing long-postponed dreams? You’re not alone. Many soon-to-be retirees are mapping out a fresh chapter—but hold up. Before you sail into the sunset, there are a few key financial moves you should have on lock.
Below, we’ll look at the top five “must-dos” that can help you retire with confidence—covering everything from making sure you don’t outlive your savings to nailing your Social Security timing. Because let’s face it: Retirement is more than a date on the calendar. It’s a financial pivot, and you want it to be a smooth one.
1. Reevaluate Your Retirement Savings
First, let’s get a pulse check on your nest egg. Retirement is often longer than you think, and living 20–30 years beyond your last paycheck requires a plan.
Key Action Steps
● Calculate Your “Magic Number”: Identify how much you’ll need per month to maintain your lifestyle. Then factor in inflation (which can quickly erode your buying power).
● Tally Up Your Accounts: Check 401(k)s, IRAs, brokerage accounts, and any pension or annuities you might have. This is your “big picture.”
● Stress-Test Your Finances: Could you handle a sudden market dip? A major medical expense? A tweak in your family’s needs (like helping grandkids with college)?
Pro Tip: If you realize you’re coming up short, it’s not game over. You might opt for an additional year or two of work, part-time gigs, or downsizing your home to lower expenses.
2. Navigate RMDs (Required Minimum Distributions) with Ease
If you’ve saved in tax-deferred accounts like a Traditional IRA or 401(k), the IRS expects you to start taking RMDs once you reach a certain age (currently 73 for many retirees, but the rules can change, so stay updated). Missing an RMD can result in hefty penalties.
Why It Matters
● Avoid Penalties: The IRS penalty can be a chunk of what you were supposed to withdraw. That’s money you could have spent on, well, anything else.
● Plan for Taxes: RMDs are generally taxed as ordinary income. If you’re close to a higher tax bracket, you might want to strategize when and how much to withdraw.
Bottom Line: Work with a tax professional (hi, that’s where we come in) to map out your withdrawal schedule and reduce your tax hit.
3. Understand Social Security Timing to Maximize Benefits
Social Security can be a critical component of your retirement income. But deciding when to claim—at 62, full retirement age (FRA), or waiting till 70—can dramatically shift your monthly check.
What You Need to Know
● Early Claim: You can start benefits at 62, but your monthly payment drops significantly compared to waiting.
● Full Retirement Age: For boomers, that’s often between 66 and 67. At FRA, you get your standard benefit amount.
● Wait Until 70: Your benefit grows by about 8% each year you delay past your FRA. That’s a big boost if you can afford to wait.
Pro Tip: Consider whether you have other income sources in the meantime. If your nest egg can cover you for a few extra years, waiting until 70 might be worth it.
4. Don’t Forget Tax Considerations
Even in retirement, taxes can take a bite out of your income. And if you’re selling a business, drawing from various accounts, or collecting Social Security, your tax puzzle might be even more complex.
Key Areas to Think Through
● Selling a Business: You might face capital gains taxes, depending on the structure of the sale.
● Partial Year of Work: If you retire mid-year, your combined wages and retirement distributions could bump you into a higher tax bracket.
● Social Security & Taxes: Up to 85% of your Social Security benefits could be taxable if your income crosses certain thresholds.
The Good News: With careful planning, we can help minimize the tax sting. Timing your distributions, leveraging deductions, and strategic charitable giving are ways to keep more of what you’ve earned.
5. Explore Part-Time Work (Because You Might Want It)
Retirement doesn’t have to be an all-or-nothing proposition. Some retirees find that a little part-time work can help with both income and staying active.
Why You Might Consider It
● Extra Padding: Even a modest income from consulting or freelancing can help you delay Social Security or reduce your annual withdrawals.
● Smooth Transition: Going from a full-time grind to zero can be jarring. A part-time schedule eases you into the new lifestyle.
● Opportunities for Social Engagement: Work can be a great way to stay connected and sharpen your skills.
Ready to Make 2025 Your Year? Let’s Talk
Whether you’re selling a business, sorting through RMD rules, or plotting a Social Security strategy, retirement has many moving parts and the decisions you make now will echo for decades in your financial life.
That’s where we step in. We help you get a crystal-clear view of your retirement budget, build a plan to manage your taxes, and ensure your money lasts as long as you do.
Let’s Get Started
Unsure if your nest egg can go the distance? Wondering if a part-time gig could help your bottom line—or if delaying Social Security is really worth it? Contact our office for a straightforward conversation about your retirement goals. We’ll help you piece together the puzzle, so 2025 can be your year to retire with confidence.
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Rose Tax & Financial
Cedar Crest, New Mexico 87008
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