Retirement Plan Update, Q2 2025

Market Recap

The economy remained resilient throughout the second quarter, despite some periods of extreme uncertainty and swings in consumer sentiment.  The initial tariff announcement in early April caused significant volatility, which diminished nearly as fast after the implementation was delayed.  That created a rollercoaster ride for most investors through the quarter but ended on a high note as many assets recovered from the correction.  Diversified portfolios were spared some of the volatility as international stocks and many bond funds performed better.  Despite the risk of higher prices from tariffs, so far inflation hasn’t flared up, and unemployment remains steady.  However, as we look forward, there are still significant unknowns in both trade policy and geopolitical risks.  There are many possible outcomes for the remainder of the year. 

Tips for Increasing Retirement Plan Assets

There are several ways to enhance your retirement plan savings to increase your overall retirement assets.  First, be sure you’re contributing enough to get your full employer match.  Many plan sponsors have matching contributions (e.g. plan sponsors contribute 4% for every 5% the participant contributes).  Plan sponsor match is essentially free money – make sure you’re getting all you can!  Second, many participants choose to set up automatic annual contribution increases.  Even an increase of 1% each year can significantly increase your retirement savings over time without much impact on your take-home pay.   Likewise, consider making retirement plan contributions from a portion of any extra funds you might get, including bonuses, raises, or tax refunds.  Since these are often not part of your regular income, it’s easier to redirect them without feeling a pinch.  Finally, look at your monthly spending and identify areas where you can cut back (e.g., dining out, coffee, or subscriptions).  Redirecting even small savings into your retirement plan can help you make consistent progress over time.  The IRS contribution limit for 2025 is $23,500 (plus a $7,500 catch-up for most over age 50).  Try to gradually increase your contributions to get closer to these limits over time.