Feb. 8, 2025

Are Your Retirement Savings on Track for 2025?

Are You Taking These 10 Smart Steps to Maximize Your Retirement Savings in 2025?

Retirement planning is a crucial aspect of financial stewardship, a concept deeply rooted in Christian values. As Proverbs 21:5 ¹ reminds us, "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty." This proverb emphasizes the importance of thoughtful planning and disciplined effort in managing our resources, including those set aside for retirement. In this spirit, let's explore ten smart steps you can take to maximize your retirement savings in 2025, integrating biblical principles and practical strategies for a secure and fulfilling retirement. Are Your Retirement Savings on Track for 2025?

Check out the full podcast episode:

1. Know Your Contribution Limits and Take Advantage of Catch-Up Provisions

To effectively manage the resources God has provided, it's essential to make the most of tax-advantaged retirement savings plans. Start by understanding the contribution limits for various retirement accounts and utilize catch-up provisions if eligible.

Workplace Retirement Plans

In 2025, the contribution limit for employees participating in 401(k), 403(b), and most governmental 457 plans is $23,500 ². If your employer offers a retirement plan, take full advantage of it and contribute as much as you can, especially if your employer offers matching contributions ³. This is essentially "free money" that can significantly boost your retirement savings.

If you're 50 or older, you can contribute an additional $7,500 as a catch-up contribution, bringing the total to $31,000 ². Furthermore, if you're between the ages of 60 and 63, a higher catch-up contribution limit of $11,250 applies, allowing you to contribute up to $34,750 in 2025 ². This provision, part of recent legislation designed to enhance retirement savings, aims to help those closer to retirement boost their savings significantly ⁵.

When changing jobs, it's crucial to leave your retirement savings untouched ³. You can leave the funds in your current plan, roll them over to an IRA, or transfer them to your new employer's plan. If your employer doesn't offer a retirement plan, consider suggesting that they start one ³. Workplace retirement plans offer valuable tax benefits and can help you save consistently for the future.

Individual Retirement Accounts (IRAs)

For those saving in Traditional and Roth IRAs, the contribution limit remains $7,000, with an additional $1,000 catch-up contribution for those aged 50 and older in 2025 ². Starting in 2026, the IRA catch-up contribution limit will be subject to an annual cost-of-living adjustment ². You can contribute to both a Traditional and a Roth IRA as long as your total contributions don't exceed the annual limit ⁷.

You can also contribute to a spouse's IRA, even if they don't have earned income ⁷. This can be a valuable way to increase retirement savings for your family, especially if one spouse has limited earning potential.

SIMPLE Retirement Plans

SIMPLE IRAs are another option for retirement savings, particularly for small businesses and self-employed individuals. In 2025, the contribution limit for SIMPLE IRAs is $16,500, with a catch-up contribution limit of $3,500 for those aged 50 and older ². There's also a higher catch-up contribution limit of $5,250 for those aged 60 to 63 ².

Special Catch-Up Contributions for 457 Plans

If you participate in a governmental 457 plan, you may be eligible for "special catch-up contributions" if you are within three years of your normal retirement age and have under-contributed in prior years ⁸. This provision allows you to contribute up to twice the normal contribution limit, providing an opportunity to boost your savings as you approach retirement.

Comparison of Retirement Savings Plans

To help you understand the key differences between these plans, here's a comparison table:

Plan Type	Contribution Limit (2025)	Catch-Up Contribution (2025)	Tax Benefits
401(k), 403(b), 457(b)	$23,500	$7,500 (age 50+), $11,250 (age 60-63)	Traditional: Tax-deductible contributions, tax-deferred growth, taxes paid upon withdrawal. Roth: After-tax contributions, tax-free withdrawals in retirement.
Traditional IRA	$7,000	$1,000 (age 50+)	Tax-deductible contributions, tax-deferred growth, taxes paid upon withdrawal.
Roth IRA	$7,000	$1,000 (age 50+)	After-tax contributions, tax-free withdrawals in retirement.
SIMPLE IRA	$16,500	$3,500 (age 50+), $5,250 (age 60-63)	Tax-deductible contributions, tax-deferred growth, taxes paid upon withdrawal.

Remember to prayerfully consider your financial situation and seek guidance from a trusted financial advisor to determine the best approach for your retirement savings. As Proverbs 15:22 ⁹ states, "Plans fail for lack of counsel, but with many advisers they succeed."

2. Start Early, But It's Never Too Late to Begin

The principle of sowing and reaping, found in Galatians 6:7 ¹⁰, applies to our finances as well. "Do not be deceived: God is not mocked, for whatever one sows, that will one also reap." Starting early with retirement savings allows your investments more time to grow and compound, potentially leading to greater abundance in the future.

However, even if you haven't started saving early, it's never too late to begin. Proverbs 13:11 ¹¹ reminds us, "Wealth gained hastily will dwindle, but whoever gathers little by little will increase it." Consistent, even small, contributions over time can make a significant difference in your retirement savings. For example, if you begin saving $6,000/yr. at age 35 and continue doing so for the next 30 years until you are 65, assuming an average annual return of 6%, you will have accumulated approximately $474,000 in total savings at age 65. If instead, you were to begin your savings journey 10 years earlier at age 25 and quit contributing at age 55 (again saving $6,000/yr. for a total of 30 years), you would have approximately $849,000 at age 65 ¹². This represents an increase of almost 80% in your total savings by simply starting 10 years earlier ¹².

3. Diversify Your Investments

Ecclesiastes 11:2 ¹³ advises, "Give a portion to seven, or even to eight, for you know not what disaster may happen on earth." This wisdom applies to investing as well. Diversifying your retirement portfolio across different asset classes, such as stocks, bonds, and real estate, can help mitigate risk and potentially enhance returns.

4. Minimize Investment Fees

Fees can significantly erode your retirement savings over time. Be mindful of expense ratios in mutual funds and ETFs, and consider low-cost index funds as a way to minimize investment costs.

5. Rebalance Your Portfolio Regularly

As market conditions change, your portfolio's asset allocation may drift from your original target. Rebalancing involves periodically adjusting your investments to maintain your desired asset mix, helping to manage risk and potentially improve returns.

6. Consider Tax-Efficient Investing

Minimizing taxes can help you keep more of your hard-earned money. Consider tax-advantaged retirement accounts like 401(k)s and IRAs, and explore tax-efficient investment strategies to reduce your tax burden.

7. Plan for Healthcare Costs

Healthcare expenses can be a significant burden in retirement. Factor in potential healthcare costs when planning your retirement budget, and consider options like Health Savings Accounts (HSAs) to help cover medical expenses. HSAs offer a triple tax advantage: contributions are tax-deductible, funds can be invested for potential growth over time, and withdrawals for qualified medical expenses are tax-free [14].

8. Evaluate Your Housing Situation

Your housing situation can significantly impact your retirement expenses. Consider downsizing or relocating to a more affordable area to reduce housing costs and free up more money for retirement savings.

9. Delay Social Security Benefits

Delaying Social Security benefits can result in a larger monthly payment, providing a more secure retirement income stream. Consider your financial situation and health when deciding when to claim Social Security.

10. Seek Professional Advice

Proverbs 11:14 [15] states, "Where there is no guidance, a people falls, but in an abundance of counselors there is safety." Seeking guidance from a qualified financial advisor can provide valuable insights and help you make informed decisions about your retirement savings.

By following these ten smart steps, you can take proactive steps to maximize your retirement savings in 2025, aligning your financial goals with biblical principles and ensuring a more secure and fulfilling retirement.

References

¹ Proverbs 21:5 (ESV) ² https://www.bankrate.com/retirement/how-to-maximize-retirement-savings/ ³ https://www.merrilledge.com/article/10-tips-to-help-you-boost-your-retirement-savings-whatever-your-age-ose ⁴ https://www.decal.ga.gov/documents/attachments/Retirement_Part3_EN.pdf ⁵ https://www.finra.org/investors/insights/things-to-do-boost-retirement-savings ⁶ https://www.fidelity.com/learning-center/personal-finance/retirement/how-to-max-out-your-retirement ⁷ https://www.finra.org/investors/insights/things-to-do-boost-retirement-savings ⁸ https://www.finra.org/investors/insights/things-to-do-boost-retirement-savings ⁹ Proverbs 15:22 (ESV) ¹⁰ Galatians 6:7 (ESV) ¹¹ Proverbs 13:11 (ESV) ¹² https://stories.td.com/us/en/article/ways-to-maximize-your-retirement-savings-and-build-wealth ¹³ Ecclesiastes 11:2 (ESV) [14] https://www.plancorp.com/blog/maximizing-retirement-savings [15] Proverbs 11:14 (ESV)

Works cited

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Top 10 Ways to Prepare for Retirement - U.S. Department of Labor, accessed February 2, 2025, https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/dol-top-10-ways-to-prepare-for-retirement-booklet-2023.pdf
10 Different Ways to Help You Boost Your Retirement Savings - Merrill Edge, accessed February 2, 2025, https://www.merrilledge.com/article/10-tips-to-help-you-boost-your-retirement-savings-whatever-your-age-ose
COLA increases for dollar limitations on benefits and contributions - IRS, accessed February 2, 2025, https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions
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2024-2025 Roth IRA Contribution Limits - Charles Schwab, accessed February 2, 2025, https://www.schwab.com/ira/roth-ira/contribution-limits
Texa$aver contribution limits change in 2025 - ERS, accessed February 2, 2025, https://www.ers.texas.gov/news/TexaSaver-contribution-limits-change-in-2025
How to catch up on retirement savings: 3 strategies - MassMutual Blog, accessed February 2, 2025, https://blog.massmutual.com/retiring-investing/retirement-savings-catch-up
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Ralph V. Estep, Jr.

Christian Financial Consulting

Ralph V. Estep, Jr. is a highly accomplished professional with a diverse background in finance, accounting, technology, and entrepreneurship. As the principal at Saggio Management Group, Inc., he has demonstrated exceptional leadership and expertise in various roles throughout his career.

Ralph's educational journey began at St. Mark's High School in Newark, Delaware before attending the University of Nebraska where he was an esteemed member of the Cornhusker Marching Band and had the privilege of performing at the Florida Citrus Bowl in Orlando.

Continuing his pursuit of knowledge and excellence, Ralph earned a Bachelor of Science Degree in Accounting from the University of Delaware. He further expanded his academic achievements by obtaining a Master's in Business Administration from Wilmington University.

Throughout his professional journey, Ralph has been recognized for his outstanding accomplishments and commitment to excellence. He is a member of prestigious organizations such as the Golden Key National Honor Society and Beta Gamma Sigma International Business Honor Society.

With an extensive range of professional designations including Licensed Public Accountant (LPA), Accredited Business Accountant (ABA), Accredited Tax Advisor (ATA), Accredited Tax Preparer (ATP), and Internal Revenue Service Registered Tax Preparer (RTRP), Ralph possesses comprehensive expertise in tax preparation and financial management.

Beyond his impressive qualifications, Ralph has actively engaged with various community programs as bo… Read More

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