By conducting a mid-year review using the Rational Finance framework, you can make adjustments today that improve your tax outlook for next April, keep your retirement savings on track, and adjust your investment portfolio to match current trends. While our previous blog took a broader approach to mid-year reviews, today we will look at specific steps you can take to pause, reflect, and realign your financial strategy.
It’s easy to ‘set and forget’ retirement accounts, especially if contributions are automated, but taking time for a mid-year check-in can make a real difference. Even small changes can compound into significant long-term payoffs. Periodically reassessing ensures that your retirement strategy evolves in tandem with your life circumstances and financial goals.
For 401(k)s, you can contribute up to $23,500 in 2025. Those who are 50 or older can contribute an extra $7,500, and if you’re between 60 and 63, you receive an additional $11,250 in catch-up contributions. For IRAs, the limit is $7,000, plus another $1,000 if you’re 50 or older. If you’ve recently had a birthday that ups your contribution limits, consider taking advantage of that.
Make sure you’re taking full advantage of any matching contributions your employer offers. It’s essentially free money, so be sure to utilize it.
If retirement is approaching, market turbulence may feel alarming. The sharp downturn earlier this year highlighted this concern. However, pulling everything out in a panic often leads to missed opportunities, especially when the market rebounds, as it has already done this year. A measured, diversified approach is usually best. The Rational Finance framework can help you learn how to mitigate financial uncertainty and make informed choices that are best for you.
Having an adaptable investment strategy is always important, but it becomes even more essential during times of market volatility. Economic shifts, new legislation, and unexpected downturns, such as the severe dip earlier this year, can change the landscape quickly.
Reassess whether your current portfolio continues to align with your long-term goals and your comfort level with risk.
The recently passed legislation is expected to significantly add to the national debt, potentially increasing Treasury yields. This may change the ideal allocation strategy. Consider switching your investment strategy to assets like treasury bonds, which offer guaranteed returns, as periods of higher national debt and increased inflation tend to coincide with higher 10-year treasury yields.
Reviewing your estate plan allows you to adjust beneficiaries, trustees, or charitable gifts. Taking the time to review your estate plan is essential to ensure it aligns with your current life and wishes. Events such as marriages, births, passings, or career changes can cause changes in your life, your family’s lives, and your final wishes. Your legacy is more than the money you leave behind; it also gives you the chance to reflect on the financial lessons, habits, and skills you are passing on to your family.
Don’t wait until tax season to consider your tax bill. Planning is crucial, especially with numerous legislative changes set to take effect. Acting now not only reduces the stress of filing but also gives you greater control over how much you ultimately owe.
Tax-deductible donations made before year-end can meaningfully reduce your taxable income. Only charities with IRS-recognized tax-exempt status are deductible, so it’s important to practice due diligence.
Explore ways to reduce your tax burden before the year’s end. Use strategies such as tax-deductible charitable donations and putting money you want to save in certain tax-advantaged savings accounts, such as 529 Plans for educational costs. These efforts can lower your taxable income and help you save for the future.
Depending on your circumstances, contributing to a Health Savings Account (HSA) can provide an excellent tax advantage. For individuals with high-deductible health plans, this can be a powerful way to both reduce your current tax burden and build a long-term healthcare safety net.
A mid-year review ensures that your financial strategy remains aligned with what truly matters to you. Do your finances align with your aspirations? Rational Finance asks you to balance facts with meaning. By stepping back and reviewing your current position, you can reset your strategy and realign with your long-term vision. That way, you can establish a stronger financial foundation for the second half of the year and beyond.
Making next year better starts now. A thoughtful mid-year review allows you to make proactive adjustments to your retirement savings, investment portfolio, estate plan, and tax strategy. It is the perfect time to cut through the noise, focus on what matters most, and create strategies that keep you moving forward with clarity and confidence.