Your Financial Year in Review: What to Update Before the Clock Strikes Midnight

Author: Hillary Stalker, CFP®

As the final weeks of 2025 tick by, it’s a good time to take stock of your financial picture and look ahead to what’s changing in the new year. Even small adjustments, from contribution limits to tax bracket shifts, can influence your buying power, taxable income, and long-term savings. Understanding these changes now gives you time to prepare and start 2026 on the strongest financial footing possible.  

A 2.8% Social Security Increase

Social Security recipients will see a 2.8% Cost of Living Adjustment (COLA) in 2026.

While not as dramatic as increases during high-inflation years, this bump still offers meaningful support as costs for everyday essentials, such as groceries, utilities, and healthcare, continue to rise. For retirees, it’s a reminder to revisit your budget and confirm your spending plan reflects the updated monthly benefit.

Several IRS adjustments also take effect in January, each designed to reflect inflation but still important to understand as you map out your year:

• Higher Standard Deduction - A larger standard deduction means more of your income is protected from taxation. This could lead to a lower tax burden for many households.
• Wider Income Tax Brackets - Inflation-adjusted tax brackets slightly widen the income range for each tier. As more of your income falls into lower tax brackets, this may result in a modest increase in take-home pay throughout 2026.

Review your tax withholdings to make any adjustments to help you avoid surprises when it’s time to file your return.

Updates to HSA Contribution Limits

Health Savings Accounts remain a valuable tool for those enrolled in high-deductible health plans, offering triple tax benefits.

For 2026:

• Self-only coverage: up to $4,400
• Family coverage: up to $8,750
• Catch-up contribution (55+): remains $1,000

Because these accounts can also serve as supplemental retirement savings for those who can afford to leave the funds untouched, maximizing contributions when possible can meaningfully strengthen long-term financial security. 

IRA and Roth IRA Contribution Increases

Both Traditional and Roth IRA limits are rising in 2026:

• Under age 50: up to $7,500
• Age 50+: up to $8,600 (includes a $1,100 catch-up)

These changes provide savers with more room to build tax-advantaged retirement balances, especially helpful for those aiming to close savings gaps or accelerate progress toward their long-term goals.

Workplace retirement plans are also increasing their contribution thresholds. Those under age 50 can contribute up to $24,500, with catch-up contributions of $8,000. Even a small bump, just 1% or 2%, can make a substantial difference over time thanks to compounding.

Key Year-End Action Steps

While some of these updates happen automatically through employer-sponsored plans, others require your attention to ensure you’re taking full advantage of the new limits and rules.

Consider reviewing:

• Your retirement plan contributions to capture the new limits
• Tax withholding elections based on bracket and deduction changes
• HSA contributions to ensure you’re maximizing tax-free savings
• Your investment allocation to confirm it still aligns with your goals and time horizon
• Year-end is also an ideal moment to reset your financial priorities, define new savings milestones, and prepare for upcoming expenses in 2026.

A trusted advisor can help you sort through the details, determine what matters most for your situation, and make adjustments that keep your money working as efficiently as possible.

A few thoughtful steps today can lead to meaningful financial improvements tomorrow. As we approach a new year, staying informed and proactive is the best way to position yourself for success.