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2025 Planning

We want to be sure you were aware of changes in contribution limits for the various types of plans to which you may be contributing as well as a few other changes for 2025:   

• 401k, 403b, most 457 plans and the federal government’s Thrift Savings Plan contribution limits increased to $23,500 with an additional $7,500 if age 50 or older. (total of $31,000 if age 50 or older), and an additional $3,750 for ages 60 to 63 (total of $34,750 if age 60-63). 
• SEP IRA contribution limits increased to 25% of compensation up to $70,000.  
• SIMPLE IRA contribution limits increased to $16,500, $20,000 if age 50 or older, $21,750 if age 60-63.  
• IRA and Roth IRA contribution limits remained $7,000 or $8,000 if age 50 or older.  
• Roth IRA contributions are still subject to income limits.  Contributions start to phase out at an adjusted gross income above $150,000 for single filers or $236,000 for married filing jointly. Be sure you’ll be below the income limits before making a Roth IRA contribution. (You have until April 15^th of the following year to make the previous year’s contribution) 
• Health Savings Account (HSA) contribution limits increased to $4,300 for an individual plan or $8,550 for family plans with an additional $1,000 if age 55 or over. 
• Qualified charitable distributions (QCDs) increased from $105,000 to $108,000.  These are charitable donations made from IRAs after age 70 ½.   
• Up to $35,000 of unused 529 assets can be rolled over into a Roth IRA. (subject to various rules)    
• The annual gift tax exclusion is increasing to $19,000 per person for 2025.  This means that anyone can gift another individual up to $19,000 in 2025 without having to report the gift for tax purposes.  
• The Social Security Administration announced a 2.5% cost of living adjustment for 2025 after a 3.2% increase for 2024.  

Markets

A few stats about the S&P 500 as we approach the end of 2024:

• The S&P 500 closed above 6,000 for the first time ever in November. It took more than 70 years for the index to first close over 1,000, 16.6 years to go to 2,000, 4.9 years to go to 3,000 and just 276 days to go from 5,000 to 6,000 (Source: Bespoke) 
• If the S&P 500 were to track its annualized performance of the past 50 years, the index would cross the 10,000 level roughly 6 years from now in mid-2030. (Source: Bespoke) 
• Since 1928, the S&P 500 has averaged about one 10 percent+ correction per year, but there has been no 10 percent+ correction in 2024. (Source: Bespoke)  
• The S&P 500 has experienced four 7+ day winning streaks in the past 6 months. The only other 6-month period to experience the same was August 1964 to February 1965. (Source: Bespoke) 
• The “Mag 7” stocks (Apple, Microsoft, Alphabet, Amazon, Meta, Tesla, and Nvidia)  continue to account for a large percentage of the return for the index.  These seven stocks account for over half of the S&P 500’s return for 2024.  (Source: Reuters) 

So, what does this all mean moving forward?   Probably very little.  

It’s that time of year for “experts” to predict what the market will do next year or perhaps even what it will do over the next ten years.   Remember back two years ago when virtually every forecast was for a recession and a poor year for equities.  Remember back a year ago when many thought the market had run up too much and couldn’t continue, especially with a contentious election upcoming.  Looking back at market outlooks and predictions from the top Wall Street firms, the past few years have shown that no one knows how markets will react each year.   Not only were they wrong, they weren’t even close. So, what should you think about as we enter a new year? 

1. Do I have enough money in “safer” investments to meet my income needs for the next 3-5 years if markets do pullback? 
2. Have I saved enough or am I saving enough to meet my long-term financial needs if returns the next 10-20 years don’t look like the past 10-20 years?  
3. Am I well diversified or are my investments too concentrated putting my long-term financial security at risk? 
4. Am I comfortable with my current allocation and willing to stay invested when the next pullback occurs?  
5. Is everything setup and positioned to take care of my loved ones and pass on per my wishes if something were to happen to me?  

After two strong years for equity markets, and valuations much higher than historical averages, don’t be surprised to see a pullback or muted returns in 2025.   Also, don’t be surprised if you see another strong year if earnings and economic data remain  or surprises to the upside.  Be prepared and accept that no one really knows how 2025 will play out but maintaining a longer-term perspective is one of the keys to success over time.  

Please reach out if there are any changes to your 2025 cash needs or you would like an update on your current portfolio going into year end.  

We wish you very happy holidays and a new year filled with much happiness and good health! 

This material is meant for general illustration and/or informational purposes only.  Views expressed in this newsletter may not reflect the views of Osaic Wealth, Inc.  It is our goal to help investors by identifying changing market conditions.  However, investors should be aware that no financial advisor can accurately predict all of the changes that may occur in the market.   This material should not be relied upon as investment advice.  Investors should note that there are risks inherent in all investments, such as fluctuations in investment principal.   There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. This article contains forward looking statements and projections.  Past performance is no guarantee of future results.  Neither Osaic Wealth, Inc. nor its representatives provide tax or legal advice.  If you don’t wish to receive marketing emails from this sender, please reply to this email with the word REMOVE in the subject line.