Cole Stoneman: Hello, everyone. My name is Cole Stoneman, Certified Financial Planner here to help you navigate some of the most important financial and tax changes happening in 2025. So, first off, we're going to talk about to be talking about your budget and emergency funds, no changes here, but I wanted to update and let everyone know a great tool that is available as the foundation for your financial health is really a solid budget. In your 403b,

we have something called Wellness Path. Wellness Path is a program that Lincoln has that is a great tool that you'll see more information about coming out that's available right now if you log in and can help you with creating a budget, tracking your spending, you name it. So create that good foundation, very beginning of this year, if you can.

The second thing I wanted to talk about was tax bracket adjustments and standard deduction increases for this year. So the IRS has adjusted tax brackets for inflation again, which is great news if you want to keep more of your hard earned money. The standard deduction now is 30,000 for married couples filing jointly and 15,000 for singles.

Here's the big point people often miss. So our tax system is progressive. So if you earn 1 dollar into the next bracket, only that dollar is taxed at the higher rate. Not all of your income. So if you make 100,001 dollars and the new bracket starts, at a hundred thousand, only that last dollar is taxed at the higher rate.

So understanding this can help you make, I think, better financial decisions without fearing of hitting a higher tax bracket. I've had people come into my office saying, I don't want to make as much money because I don't want to be taxed as much. If that's the case, come see me. We'll get some of that misunderstandings back in line, but additionally on your tax returns, you'll be able to see maybe two different tax rates. You're going to see a marginal tax rate and effective tax rate. And that marginal rate is what bracket was that last dollar in? That's your marginal rate. Your effective rate is all of those tax brackets together. Okay. So the one you're going to want to keep track of is really that effective rate.

Okay, number three, retirement contribution, limits and savers credit boost. So good news for retirement savers, contribution limits are increasing for 403B's, 401K plans, to $23,500 with an extra $7,500 catch up if you're over 50. Uh, traditional and Roth IRA limits, still stayed at $7,000, but if you're 50 and older, they did increase to $8,500. So a little bit of bump there. Something extra cool for this year. If your income is below certain thresholds, you might qualify for the savers credit. This can be up to 50 percent of your contributions with a maximum of 2000 if you're single and 4,000, if you're married filing jointly. So a credit is much different than a deduction. A credit is basically saying, hey, if I have a $4,000 tax credit, that means that's $4,000 in taxes I'm not paying. It's a huge, huge benefit. If your adjusted gross income is below $36,500, if you're single, or $73,000 for married couples you could qualify. So that's free money toward your retirement. So really great benefit and incentive for you to help bump and save for retirement. Any questions as normal, just come see me on this. See myself, Shannon, Hussein. I'm happy to help answer these questions as you navigate and try to save a few bucks and also get your budgets in line.

Number four, Okay. The power of compounding and investing early. Okay. So one of the biggest secrets to building wealth compounding. The earlier you start, the more time you'll have for that money to grow. And a quick illustration that I wanted to bring up was I did a couple of calculations and one was a 20 year old who was going to work until 65.

So they have 45 years of contributions, and we're going to do a future value calculation. So if you have a little pen and paper, write this down and hopefully this will be helpful for you just to realize how great compounding is. But let's assume that this individual is making $50,000. Now for a 20 year old, it might be a little high.

But also know that I'm assuming that this person never gets a raise ever in their entire working career. They're making 50,000 their entire career, and they're going to be contributing the maximum contribution amount that they can to receive the match that San Juan Regional will have. Now, remember that's 8 percent to get all of the free money

at 50 percent of that. So you're going to get a 4 percent match. So follow me on this. So this individual makes $50,000 a year. They do the 8%, which is 4,000. Just that employee's contribution at an 8 percent return at the age of 65, they'll have 1.546 million dollars. Now when we include the employer match on this, that's $2,000 a year.

That's $773,000 in additional amounts. So when you combine those together, cause that's really how this happens is you have your contribution and the employer contribution; the total would be $2,319,000. The total contribution that you made was only $180,000 into your 403B plan. So $2.3 million. Now this is in 45 years.

Now to show the power of compounding, let's say that you started a little bit later. And you only had 35 years of compounding. Now, once again, in the same level, $50,000 a year, doing the 8 percent and getting a 50 percent match.

The total contributions that you and the employer had would be $210,000. And the growth would be up to 679,000. So still so impactful. It's much better than not having anything. But when you compare just that 10 year difference, that's 679,000 compared to $2.3 million. It's so powerful to save now.

If you are 35, go grab that 25 year old. If you're 30, go grab that 20 year old. If you're 60 go grab that 20 year old or 25 year old and say, I'm going to make you save in your 403b plan, you have to do it. So it's one of the best wealth saving tools that we have. And it has to do with getting started early, using all of the free money the hospital is going to give you.

All right. Okay. Onto number five. I haven't talked about this in the past, but I wanted to bring this up. Many of you might have parents that are a little older. You might be on the board of a church or a charity. Or, you may be 70 and a half or older now. So I wanted to bring light how you should potentially be, or how those loved ones should be giving money to charities once they are 70 and a half.

Now, this isn't a hard and fast rule for everyone, but for the majority of people they should be donating their IRA money instead of cash. That way the money is not being taxed at that individual's level. So we can a little bit more into detail if you have any questions about how to do a qualified charitable distribution through an IRA if you're 70 and a half and older.

But the other thing was giving appreciated stock. If you have a stock, let's say that you bought for $2,000. Now it's worth $10,000. Donating the stock directly to the charity allows you to avoid capital gain taxes on that $8,000 gain, while still deducting the full $10,000 value if you itemize your taxes.

Now, if you don't itemize your taxes and you are still donating pretty regularly, but you aren't getting above that $30,000 standard deduction, come see me. I'll give you a couple ideas where maybe you can bunch your savings into a one year and put that money into a donor advised fund or some kind of tool.

So I'll give you a couple ideas there if you need some additional support and help. So that's a powerful double tax win just by giving that appreciated stock, if you haven't thought about that before. Anyone that has crypto or, you know, they bought Nvidia several years ago.

All right. On to number six. So estate and gift tax exemption changes. I'm not going to cover this too much. Just know that if you're above 13 million, you probably need to see an estate attorney as that is the limit for the gift tax exemption. So oftentimes you'll hear, the Democrats call it the wealth tax. And Republicans will call it the death tax.

All they're talking about is the estate tax. And if you're not worth more than that $12.92 million dollars, then we don't need to worry about any of your estate being taxed. Additionally on estate planning, make sure that you have your will, your trust, your power of attorneys. Make sure you have those documents in place.

If you need some help with that, let us know we can pointt you in the right direction. But everyone should have those directives on file and part of their overall estate plan, especially if you have children, second marriages, et cetera.

All right. Lastly, regular financial checkups, just like you go to the doctor for a physical, your finances need regular checkups. So review your insurance coverage gaps. If you're paying too much for your insurance, shop it out, go see an insurance agent, see if they can drop those rates. If you call, sometimes they will, they're not going to do it proactively. So it takes you to be proactive to go and change some of those insurances.

I was lucky to save $4,000 just last year by changing my insurance company, not the coverage amount, but the company. Look at your, and review your investment allocations, savings progress at least once a year. And of course, just stay up to date on any new tax laws that are happening, any tax law changes that are coming up.

Additionally, there's going to be more changes in the 403B that you'll be seeing, as far as legislation concerned. So stay up to date on some of those. We'll send out some notifications and updates as those come out. So there you have it. Staying on top of these changes can really set you up for success in 2025.

Remember, the key is to be proactive, not reactive, and hopefully you enjoyed today's episode. Thank you.