As you approach retirement, it’s time to ensure your financial plans are up-to-date with the latest changes. Major 2025 updates – from the One Big Beautiful Bill Act (OBBBA) to SECURE 2.0 – have introduced new opportunities and considerations for retirees. In this guide, we’ll walk through key areas of retirement planning, with practical, advanced tips that are still easy to digest. Let’s dive in and help you plan confidently for the retirement you deserve.

1. Map Out Your Retirement Timeline & Lifestyle Goals

• Target Retirement Age: Decide when you plan to retire and estimate how many years you’ll need to fund — many Americans now spend 20+ years in retirement. Retiring at 62 vs. 70 can drastically change your income and savings needs.
• Lifestyle Vision: Consider whether you want to travel, downsize, pursue hobbies, volunteer, or work part-time. These choices shape your budget and investment mix.
• Investment Shift: As you near retirement, gradually reduce exposure to high-risk assets while keeping enough growth investments to offset inflation.

Next Steps: Create a retirement timeline with key milestones (e.g., target retirement date, when each spouse reaches age 62/65/70, when mortgages or other debts will be paid off). Alongside, list your retirement goals and assign rough dollar amounts. This will clarify how much you need to save and what adjustments to make in your final working years.

2. Social Security: Timing & 2025 Updates

• Full Retirement Age (FRA): For those born in 1960 or later, FRA is 67. Claiming early at 62 reduces benefits by about 30%, while delaying to 70 increases them by roughly 8% per year — a 24% boost vs. claiming at FRA.
• 2025 COLA: Benefits rose 2.5% this year (~$50/month for the average retiree). The maximum FRA benefit is now over $3,500/month, and the taxable wage base increased to $176,100.
• Earnings Test: Before FRA, you can earn up to $23,400/year without penalty; above that, $1 is withheld for every $2 earned over. In the year you reach FRA, the limit is $62,160, with $1 withheld per $3 over. All limits vanish at FRA, and benefits are recalculated to credit withheld amounts.
• New 2025 Tax Break: The OBBBA created a deduction that removes federal income tax on Social Security for 90% of seniors. A single senior with an average benefit ($24,000/year) and modest other income will now likely owe zero federal tax.

Next Steps: Use the SSA’s calculators to compare benefits at different claiming ages and coordinate with a spouse for maximum lifetime and survivor benefits.

3. IRA, Roth, & 401(k) Withdrawal Rules

• RMD Start Age: Raised to 73 by SECURE 2.0, increasing again to 75 in 2033 for those born in 1960 or later. If you turn 72 in 2025, your first RMD is due in 2026.
• Penalties Reduced: Missing an RMD now results in a 25% penalty (10% if corrected quickly).
• Roth Accounts: Roth IRAs never had RMDs, and now Roth 401(k)s are also exempt, allowing indefinite tax-free growth.
• QCD Option: From age 70½, you can donate up to $100,000/year directly from your IRA to charity, tax-free. This counts toward your RMD; the $100k limit is now inflation-indexed.
• Early Withdrawal Exceptions: Penalty-free withdrawals allowed for terminal illness, domestic abuse, certain emergencies (up to $1,000/year), and up to $2,500/year for long-term care insurance premiums.
• Contribution Limits: In 2025, you can still contribute $7,000 to an IRA ($8,000 if 50+).

Next Steps: List your retirement accounts, note RMD start ages and amounts, and decide a tax-smart withdrawal order. Many retirees use taxable funds first, then tax-deferred accounts, and save Roth assets for last. Adjust as needed for your tax bracket, and consider Roth conversions before RMDs begin.

4. Healthcare & Long-Term Care

• Medicare Drug Cost Cap: Starting in 2025, annual out-of-pocket Part D costs are capped at $2,000; insulin remains $35/month; vaccines recommended by the CDC remain free.
• Medicaid Eligibility Checks: States must verify eligibility more frequently, and coverage can be lost if renewal paperwork isn’t returned — even if you still qualify.
• ACA Marketplace: Subsidies for early retirees remain through 2025 but may end in 2026, potentially raising premiums.
• Long-Term Outlook: Medicare’s Part A trust fund faces projected shortfalls in the early 2030s, which could mean higher premiums or benefit adjustments in the future.

Next Steps:

1. Mark your calendar three months before turning 65 to review and enroll in Medicare coverage.
2. Compare Medigap vs. Advantage plans annually.
3. If you’re on Medicaid, be proactive with renewals to avoid losing coverage.
4. For early retirees, research ACA plans well before your last day of work, and budget for potential subsidy changes after 2025.

5. Tax Planning Opportunities

• Higher Deductions: 2025 standard deduction — $15,750 (single) / $31,500 (married) — plus existing 65+ add-ons ($2,000 single / $1,600 per spouse) and a $6,000 “senior bonus” through 2028.
• Phase-Out Ranges: The bonus deduction phases out above $75k/$150k income and ends completely at $175k/$250k.
• Tax Bracket Strategy: With low 2025 rates (10%, 12%, 22%), consider filling lower brackets with Roth conversions or IRA withdrawals before possible post-2028 increases.
• Other Changes: SALT cap temporarily raised to $40k through 2029 for some households; above-the-line charitable deduction returns in 2026; estate tax exemption rises to $15M in 2026; gift exclusion is $19k/person in 2025.

Next Steps: Map out your income sources and bracket thresholds now. Adjust withholding or estimated taxes, and consider multi-year Roth conversion or withdrawal strategies to smooth your lifetime tax bill.

6. Estate & Legacy Planning

• Update Documents: Wills, trusts, and beneficiaries should be reviewed regularly; account designations override your will.
• Revocable Trusts: Can help avoid probate, maintain privacy, and manage complex family or asset situations.
• Annual Gifting: Up to $19,000 per person ($38,000 per couple) tax-free in 2025; avoid gifts within 5 years of needing Medicaid unless part of a formal plan.
• Charitable IRA Gifts: Qualified Charitable Distributions from IRAs after 70½ remain tax-free and can fulfill RMDs.

Next Steps: Meet with an estate planning attorney every 5–10 years (or after major life changes), and coordinate your will, trust, account titling, and beneficiaries so they work together.

Retirement is a journey, and like any journey, having a good roadmap makes all the difference. By understanding your timeline, maximizing Social Security, leveraging IRAs and new laws, securing health coverage, planning for taxes, budgeting wisely, and preparing your estate, you’ll be well-equipped for a comfortable retirement.

And remember, you don’t have to do it alone. DJL Accounting is here to help you plan confidently at every stage of life. With thoughtful planning and the latest 2025 updates on your side, you can focus on what really matters in retirement: making memories, pursuing passions, and spending time with those you love, worry-free about the finances.

Here’s to a secure and happy retirement!