9 Big Economic Developments and How They Will Help (or Hurt) Your Finances in 2025

As we enter 2025, several economic, legal, and social changes are already in place and poised to impact your finances. Some of these developments offer opportunities for financial growth, while others may bring new challenges.

Let’s examine the most important things to watch as we begin 2025 and see how they may affect your wallet.

1. How the Trump Administration Could Shake Things Up

Presidential politics can have a huge impact on the finances of ordinary people. However, what parts of their agenda will be pursued is unknown. Also, policies do not always have the expected results, making it difficult to predict how managers will manage their pocketbooks.

• Will Trump’s tariffs cause inflation, strengthen the domestic economy, or both?
• Will lower corporate tax rates boost stock prices?
• Will personal tax rates stay low (or go down) throughout this administration?
• Will Social Security and Medicare continue as they are now?
• Will the Consumer Financial Protection Bureau (CFPB) be disbanded and many consumer policies rolled back?

We never really know what will happen and predicting the future can be a game of whac-a-mole.

Preparation Method: Know your personal financial goals and have a flexible and flexible plan to achieve them. Boldin Planner is your partner as you change and the world evolves.

2. Supersized 401k Retirement Funds

Good news for retirement savers! Starting in 2025, people ages 60 to 63 can make maximum participating contributions to their 401(k) and 403(b) plans. The change, part of the SECURE 2.0 Act, is designed to help older workers close retirement savings gaps.

In 2025, the 401(k) contribution limit is $23,500, with a catch-up contribution of $7,500 for workers age 50 and older. Workers ages 60–63 can contribute an additional $11,250.

Explanation

• The $23,500 limit is up from $23,000 in 2024
• The catch-up contribution limit for workers age 50 and older remains at $7,500
• The catch-up contribution limit for workers age 60-63 increases to $11,250
• The maximum contribution limit for a person aged 60-63 is $34,750

So, if you’re married and you’re both between the ages of 60 and 63, that’s another $69,500 that could be saved in a tax-advantaged account. And, that’s before employer contributions!

How to Benefit: It would be difficult to save any money, let alone nearly $35,000 per person. However, making efforts to increase your contributions if you are eligible can be beneficial. Here are some ideas to save more and check out 15 ways most families waste money that could go into savings.

3. Limits on Out-of-Pocket Physician Expenses for Medicare Recipients

The Affordable Care Act’s cap on Medicare Part D out-of-pocket drug costs goes into full effect in 2025. Beneficiaries will not pay more than $2,000 a year for prescription drugs, which has changed for those with high drug costs.

How to Benefit: Review your current drug costs and plan options during open enrollment. This cap can provide significant savings to Medicare recipients.

4. Higher Income Limits for People Who Work While Receiving Social Security

If you take Social Security early and continue to work, you can now earn more money before your benefits are reduced. The amount you can earn before your benefits are temporarily reduced increases slightly to $23,400, up from $22,320 in 2024.

How to Benefit: A reduction in Social Security benefits due to work should not prevent employment. The reduction in benefits is temporary and once you reach full retirement age, Social Security returns the withheld money, adding it to your monthly paycheck over time.

5. Inherited IRA Rules Are Strict

The IRS continues to enforce strict rules for inherited IRAs, requiring most non-spousal beneficiaries to withdraw all funds within 10 years of the inheritance. The exact distribution requirements are confusing and the shortfall penalties are significant.

How to practice: The rules are confusing. However, we have a fix. Use the Boldin Planner to see what rules apply to your inherited IRA and see the impact of distributions on your income, tax liability, and more.

6. Medical Debt Relief Measures

A full one-fourth of all Americans owe money on overdue health care bills. Also, the CFPB estimates that there are 49 billion dollars in 15 million credit reports.

Recognition of the burden of medical debt has led to legislative efforts to improve financial protection for patients. By 2025, new reporting laws will limit how medical debt affects your credit score, and some states are introducing interest rates on unpaid medical debt.

How to Benefit: Monitor your credit reports and challenge errors. Check out financial assistance programs or negotiate directly with providers to manage medical bills.

7. Weather-Driven Costs

Climate change continues to impact the fund’s books, from rising insurance costs, repairs, rising heating and cooling costs, and more.

How to practice: Assess your weather-related risks and stay on top of home insurance costs.

8. Debt Suppression

This week there were big financial headlines – last-minute legislation from the Biden Administration and a slew of new policies from the Trump Administration. Lost in the controversy is that the total debt owed by the US government has exceeded the $36.1 trillion it is legally allowed to borrow. This sets the stage for Congress and the White House to fix it before the US defaults on its debt and has the power to end the financial crisis.

Preparation Method: Learn more about debt ceiling and how to prepare if the government breaches the ceiling.

9. Economic Indicators

According to the Conference Board’s index of leading economic indicators, the Biden Administration ended their term with a strong economy. There was a slight decline in December, but the last six months have been better than last year.

Also, the stock market so far is showing good news for the Trump Administration even though many economists are wary of the impact of some of his policies.

How to practice: Good investment habits suggest that you ignore the headlines and save and invest according to your financial goals.

• Don’t try to predict the future, but stay true to your investment philosophy. (Not sure about your investment philosophy? Create an investment policy statement.)
• Establish contingency plans for the possible future
• Always be flexible and adjust your plans as life progresses