New Year, New Financial Changes Ahead
A fresh year often brings a wave of resolutions, opportunities, and financial shifts. With the evolving economic and political environment, not to mention tax and retirement reform, 2026 is likely to introduce some notable changes.
“Having a solid plan is going to be essential for navigating this landscape of change,” says Eric Bernal, Senior Vice President and Portfolio Manager at Johnson Financial Group. “We always advise our clients: Start by crafting a comprehensive financial plan to guide your decisions.” If you’re without a financial planner, it might be worth looking for one via CFP Board or NAPFA.
Eight personal finance experts weigh in on what investors should keep in mind for the upcoming year and how to adapt to these impending changes.
Retirement Contribution Limits to Rise
The IRS has revealed that in 2025, individuals can increase their contributions to 401(k)s, 403(b)s, thrift savings plans, and government 457 plans from $23,500 to $24,500. For those aged 50 and above, the catch-up contribution has also been raised to $8,000.
Moreover, “starting in 2026, high-income earners will need to make catch-up contributions specifically to designated Roth accounts,” notes Ashley Weeks, Vice President and Wealth Strategist at TD Bank. “If someone earns over $150,000 in 2025, catch-up contributions to their employer-sponsored retirement plan in 2026 will have to be executed on a Roth basis. Roth accounts offer tax-free growth, but without deductions, which might not sit well with high earners during their peak earning years.”
David Johnston, a partner at OnePoint BFG Wealth Partners, thinks that these new rules are beneficial for those who qualify. “Basically, high-income earners will follow the right path: they’ll forgo today’s tax deductions for tax-free distributions down the line. We often focus too much on asset allocation, but this change introduces meaningful tax diversification, which is crucial for retirement planning,” he says.
In contrast, Devin Miller, co-founder and CEO of SecureSave, suggests ensuring a sturdy financial base and adequate emergency savings before fully investing in retirement accounts. “Without a safety net, unexpected costs can lead to 401(k) loans, early withdrawals, or new debts, compromising the benefits of those higher limits. Emergency savings help individuals maintain long-term investments by dealing with unforeseen expenses, especially important as markets shift,” he explains.
Interest Rates Likely to Decrease
Experts predict a drop in interest rates in 2026. Goldman Sachs Research anticipates that the Federal Reserve will cut rates in March and June, while TD Economics projects the next reduction by mid-2026.
This follows three interest rate cuts in 2025. “It’s become really tough to keep purchasing power with money parked in demand deposit accounts like savings or money market accounts,” Weeks says. “Inflation can disrupt even the best-planned retirements. Those who can’t afford to lose their principal may want to explore options that yield higher returns over time, such as CDs, fixed annuities, or Treasury bonds.”
However, predicting the ramifications of rate cuts for consumers is a bit tricky. “It’s essential to closely watch product yields and curves, like 10-year Treasuries compared to the federal funds rate, and determine if pricing and interest rate projections are already factored in,” cautions John Jones, a certified financial planner and investment advisor principal at Heritage Financial.
Elaine King, a CFP and founder of the Family & Money Matters Institute, suggests careful investment rather than holding cash during low-interest periods. “This promotes long-term asset growth, allowing compounding over time at better rates. But caution is crucial as this also heightens risk,” she adds.
“Many loans have a one-time float-down option that often goes unnoticed, so we’re encouraging our clients to contact their lenders sooner rather than later,” advises Elizabeth Hale, founder of eeCPA. “On the personal front, if interest rates fall and housing availability improves, 2026 might be the year when it becomes less practical for some families to continue renting. The key takeaway really is that this year favors individuals who stay engaged with their finances.”
New Tax Deductions for Seniors Under Trump’s Act
The IRS typically adjusts the standard deduction annually for inflation, potentially increasing refund amounts for many taxpayers. For the tax year 2025, the standard deduction is set at $31,500 for married couples filing jointly, $15,750 for single filers, and $23,625 for heads of households—all slightly raised from the previous year.
“One newer and potentially significant credit is for taxpayers aged 65 or older,” Bernal explains. “You or your spouse can claim a one-time deduction of $6,000.” This feature, introduced in President Trump’s Big Beautiful Act, will remain in effect until 2028 and supplements the standard deduction for seniors. For married couples aged 65 and up, the maximum is $12,000. However, this deduction does gradually reduce for incomes exceeding $75,000 for singles and $150,000 for joint filers.
That said, “investors should realize that tax efficiencies stem from the portfolio level, not just the tax return. Prioritizing tax-advantaged accounts, strategically holding different assets, and planning for philanthropic and legacy goals can significantly impact your overall financial situation more than merely chasing personal deductions,” advises Wendy Lee, CIO and co-founder of Ivy Investments.
