Simple Resolutions to Unlock Your Financial Potential in 2025
Data from Northwestern Mutual reveals five financial blind spots among Americans.
As we turn the page to a new year, it’s the perfect time to reflect on our financial habits and set goals for a secure future. In 2024, Northwestern Mutual’s Planning & Progress Study revealed insights into the blind spots many Americans face. Let’s resolve to address these gaps—and find a better way to money™—in 2025.
1. Mind the Retirement Savings Gap
Americans think they’ll need $1.46 million to retire comfortably—a number that has increased 53 percent since 2020. If your savings haven’t kept pace, it could lead to a sizeable gap between what you have and what you’ll need. Such a disconnect could lead to financial anxiety down the road and even missing out on important life goals.
Americans Think They’ll Need $1.46M to Retire
New Year Resolutions
If you think you have a retirement savings gap, here are some goals you can focus on in 2025 to help close it:
Assess your finances – To do so, take stock of how much money you have and where it’s held, how much you owe, and any assets you own and how much they are worth.
Set retirement goals – Get started by thinking about when you want to retire and the lifestyle you’ll want to lead.
Get a plan – Work with your advisor to create a tailored financial plan that helps bridge any retirement savings gap you may have and helps you make your goals reality.
2. Get Real About Your College Savings
American adults saving for college, either for themselves or a family member, expect the total to be $77,300 on average—but that’s substantially less than what a four-year degree may cost, according to our estimates.1
Anticipated vs. Actual Costs of College
New Year Resolutions
If you’re saving for college (or want to start), here are two potential goals for 2025:
Get realistic about costs – Research how much college should cost based on current data. Be sure to consider these factors: degree type, institution type, living arrangements and inflation.
Explore college savings options – Find out how 529 plans, Coverdell Education Savings Accounts, Educational Trusts, Roth IRAs and even permanent life insurance can help you meet your college savings goals. Your advisor can help educate you on these and other options.
Let’s personalize your financial plan.
Your advisor will help you define what’s important for you and your family—uncovering opportunities and blind spots. Then they’ll work with you to personalize a comprehensive plan to grow your wealth while protecting it from risks.
Find your advisor3. Prioritize Saving Up While Paying Debt Down
In 2024, two-thirds of Americans held at least some personal debt outside their mortgages. The average balance was $22,713, and the number one source of that debt was credit cards.
2/3 of Americans Held Personal Debt in 2024
For people who carry personal debt, 29 percent of their monthly income goes toward paying it off. And there’s significant urgency to do so, with 64 percent of adults saying they prioritize paying down debt versus just 36 percent who put saving first. While reducing debt is important, so is saving. That’s because saving can help you maintain a buffer in an emergency, achieve big life goals (like buying a home, starting a family or retiring) and build long-term wealth.
New Year Resolutions
If you have personal debt, it’s important to save up while paying it down. If you’re struggling to achieve the right mix, here are two ideas to help you improve in 2025:
Pay yourself first – Automating your savings and retirement contributions is a great place to start. You’ll want to treat these “payments” with the same importance and regularity as you would any fixed expense, like your rent, mortgage or utilities.
Manage debt effectively – Create a list of what you owe and prioritize which debts you want to pay off first. It typically makes the most sense to focus your payment efforts on the debt with the highest interest rate first, because you pay more in interest every month that balance remains high. Most high-interest debt will likely be associated with credit cards.
4. Stretch Your Retirement Savings With a Tax Strategy
Just three in 10 Americans have a plan to minimize the impact of taxes on their retirement savings. But having one can make a substantial impact on your life—potentially enabling you to retire sooner, live more comfortably or both.
Just 3 in 10 Americans Have a Plan to Reduce the Impact of Taxes on Their Retirement Savings
New Year Resolutions
Here’s how you can start laying the groundwork for your retirement tax strategy in 2025:
Contribute to a 401(k) or IRA – These accounts let you save for retirement with tax advantages. Contributions to a traditional 401(k) or IRA can lower your taxable income today, but you’ll pay taxes later when you withdraw money in retirement. With a Roth account you pay taxes on your contributions, but your withdrawals are generally tax-free in retirement.
Diversify the tax treatment of your retirement money – Work with your advisor to help create diversity in the tax treatment of your retirement assets. This way you’ll have access to assets with different tax treatments in retirement, giving you flexibility to manage your taxes efficiently based on your situation.
5. Debunk Estate Planning Myths
An astounding 62 percent of Americans do not have a will. For those who don’t, 34 percent don’t think they have enough assets, and 31 percent think that they are too young to need one. Notably, 90 percent of those who think they are too young are either millennials or Gen Z.
62% of Americans Don’t Have a Will
The misconception that estate planning is only for the wealthy or elderly can lead to challenges for your heirs should the unexpected happen. The truth: adults—regardless of age or asset level—need some kind of estate plan to help ensure their wishes are honored and their loved ones are protected.
5 Minute Highlight: Why Everyone Over 18 Needs an Estate Plan
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New Year Resolutions
If you don’t have basic estate planning documents in place, here are two goals for 2025:
Draft essential documents – At a minimum, most Americans should have a will, durable power of attorney, health care power of attorney and a living will in place
Update your beneficiaries – Review and update beneficiary designations on your life insurance policies and retirement accounts. These designations can supersede instructions in your will, so you’ll want to be sure everything is in alignment.
Take the First Step Toward a Financially Secure 2025
As the new year dawns, now is the perfect time to reassess your financial goals and take action to secure your future. But illuminating blind spots like these is only the beginning. Whether you’re just starting your financial journey, in the midst of building your wealth or planning for retirement, your advisor can help you find a better way to money and make 2025 a year of meaningful progress through strategic financial planning.
This publication is not intended as legal or tax advice. Financial Representatives do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.
