7 Financial Planning Takeaways from 2025
Key Points – 7 Financial Planning Takeaways from 2025
- What Can We Learn from 2025 from a Financial Planning Perspective?
- Reviewing Key Components of the Big Beautiful Bill
- Learning from Market Volatility
- Understanding Proper Risk Management
- 7-Minute Read
What Can We Learn from 2025 from a Financial Planning Perspective?
Before you put 2025 in the rearview mirror, take some time to reflect on this quote that’s typically attributed to Mark Twain and how it applies to financial planning.
The Great Recession, Dot-Com Bubble, and COVID stock market crash are widely considered as unprecedented historical events that have occurred over the past 30 years, but there are still lessons from those events that remain relevant today. That’s why our advisors stress test financial plans against various economic cycles — including recessions and other prolonged market downturns — to help our clients determine if they potentially need to adjust their spending as they approach and go through retirement.
So, what happened in 2025 from a financial planning perspective that could remain relevant in 2026 and beyond? Whether it’s learning from market volatility or understanding the impact of the One Big Beautiful Bill, let’s review seven financial planning takeaways from 2025.
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7 Financial Planning Takeaways from 2025
- Taxes are always changing
- You can’t spend an average annual return
- Asset allocation matters and markets are efficient
- Risk is always present
- Just because markets are overvalued doesn’t mean a crash is imminent
- Make sure to review your estate plan
- You don’t buy insurance hoping to file a claim
7 Financial Planning Takeaways from 2025
1. Taxes Are Always Changing
Before the One Big Beautiful Bill Act became law on July 4, 2025, the tax rates under the Tax Cuts and Jobs Act were set to expire after December 31, 2025. The TCJA tax rates became “permanent,” but that doesn’t mean that they won’t change in the future. It just means that there isn’t a sunset date in place now for them to eventually expire. As economic and political priorities change, tax law changes may change as well.
Do you have a forward-looking tax plan that accounts for current tax law and potential tax law changes? While the current tax rates are “permanent,” there are several provisions of OBBBA that are temporary, such as the additional $6,000 tax deduction for those who are 65 and older that expires after 2028 and the SALT cap increasing to $40,000 through 2029. Additionally, there are income phaseouts for many of these temporary provisions as well.
These are just a few examples of how taxes are always changing. It’s important to work with a tax professional who closely monitors tax law and looks for tax planning opportunities that may be available to you.
2. You Can’t Spend an Average Annual Return
This financial planning takeaway from 2025 ties into a few other takeaways from our list as well. Sequence of returns risk can oftentimes be misunderstood. Earlier in 2025, Dean Barber and Chris Rett illustrated why the timing of retirement matters and explained why it’s important to not spend an average annual return on America’s Wealth Management Show. They reviewed a RetireOne study that provided an example of two individuals that started with $100,000, had a 5% annual rate of return, and used a 4% withdrawal rate.2
However, one individual retired at the beginning of a 10-year bull market (followed by a five-year bear market) and the other retired at the beginning of a five-year bear market (followed by a 10-year bull market). After 15 years, the first individual had $105,944, while the other had $35,889.
FIGURE 1 – Sequence of Returns Risk – RetireOne
Once you retire, you go from working for your money to your money working for you. If there are years during your retirement where the long-term average annual return doesn’t give you the spending power you need, do you have assets that are more liquid that you can spend from instead?
Rather than constantly worrying about the rate of return on your investments, especially during times of market volatility like we saw during the first half of 2025, make sure you understand the ins and outs of cash flow planning and portfolio diversification.
3. Asset Allocation Matters and MarketsAre Efficient
That leads us right into No. 3 on our list of financial planning takeaways from 2025. On December 31, 2024, the S&P 500 closed at 5,881.63. As of December 26, 2025, the S&P 500 closed at 6,929.94, which marks a 15.13% gain for 2025. However, on April 8, 2025, the S&P 500 closed at 4,982.77. At that point, the S&P 500 was down 15.29% for the year.
FIGURE 2 – S&P 500 Performance in 2025 – S&P Global3
The market volatility from April was fueled by President Trump’s talk about imposing tariffs. There was a great deal of uncertainty about the potential impact of the tariffs, and markets don’t typically react well to uncertainty. But as you can see in Figure 2, the S&P 500 has been on a mostly-upward trajectory since April.
The next time you see or hear headline news that could have a significant impact on the markets, take some time to think before you buy or sell. Remember that historically, markets have adjusted over time. And as we previously mentioned, portfolio diversification matters too!
4. Risk Is Always Present
It may seem obvious to point out, but another financial planning takeaway from 2025 is that risk is always present. Risk may be on the forefront of people’s minds when markets are volatile, but that doesn’t mean that there isn’t risk when there isn’t much movement in the markets.
Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.4” While Buffett is widely regarded as one of the most successful investors of all-time, everyone has their own risk tolerance.5 At age 95, Buffett plans to step down as the CEO of Berkshire Hathaway at the end of 2025.6 With a net worth is $148.1 billion, Buffett probably doesn’t have to worry about running out of money in retirement. But for individuals who aren’t ultrawealthy, running out of money in retirement may be a huge concern.
Big market drawdowns can be very painful for retirees who no longer have a paycheck to fall back on. Hence why having a diversified portfolio is so important, especially in retirement. But what about someone who is early on in their career? How should they react to market volatility? Big market drawdowns might feel painful for them too, but they have time on their side. Just like we said in our third financial planning takeaway from 2025: asset allocation matters and markets are efficient. Remember to think long-term rather than acting upon fear and greed when investing.
5. Just Because Markets Are Overvalued Doesn’t Mean a Crash Is Imminent
Speaking of market risk, another financial planning takeaway from 2025 is that just because markets are overvalued doesn’t mean a crash is imminent. More than 90% of the investors surveyed in an August 2025 Bank of America survey believed American stocks were overvalued.7 As you can see from Figure 2, a crash still hasn’t happened yet.
This is an example of fear being a dominant emotion in the investing world. Market valuations are important, but trying to time the market can be costly.
6. Make Sure to Review Your Estate Plan
We’ve focused so far on financial planning takeaways from 2025 involving investments and taxes, but we’d be remiss if we didn’t discuss the importance of reviewing your estate plan. Estate planning isn’t just about planning for after you pass away. What will happen if you (or your spouse, if you’re married) becomes incapacitated? Who would make decisions on your (or your spouse’s) behalf?
Reviewing your estate plan is something to keep top of mind following major life events. Even if you haven’t had a major life event recently, do you know the last time you updated the beneficiaries on your estate plan? Maybe your legacy goals have changed since then as well.
Also, remember that if you have a will-based plan, it’s guaranteed to go through probate, which can be a long and costly process. To avoid probate, consider setting up a revocable trust, which includes a will, a living will, health care directive, and health care and financial powers of attorney.
7. You Don’t Buy Insurance Hoping to File a Claim
At Modern Wealth, our advisors are supported by specialists in tax, investments, estate planning, and insurance. We like to call these our Advantage Offerings. We’ve shared some financial planning takeaways from 2025 that focus on investments, taxes, and estate planning, so let’s round out this article with a financial planning takeaway involving insurance.
It’s important to think of insurance as risk management rather than getting a return on investment. When you buy insurance, you purchase the policy hoping that you’ll never need to file a claim. But if the unexpected occurs, the policy is there to help cover the expense.
For example, some people might consider purchasing long-term care insurance in retirement so that they receive the level of care that their spouse, children, or other loved ones might not be able to provide. Long-term care planning doesn’t just pertain to retirement either. What if you (or your spouse) get into a serious accident or have a critical illness that requires long-term care? Those aren’t scenarios that you want to happen, but having insurance can help provide peace of mind financially in difficult situations.
Bonus Financial Planning Takeaways from 2025: It’s Important to Have a Financial Planning Team That’s Working for You
There are many more financial planning takeaways from 2025 that we could share, but hopefully these seven takeaways help explain why it’s important to have a goals-based financial plan that considers taxes, investments, estate planning, and insurance.
While our advisors try to be as knowledgeable as possible in each of those areas, their objective is to help clients toward their goals, considering the appropriate amount of risk based on each individual’s circumstances. They are able to focus on that at a much higher level because of the support they receive from our tax, estate, insurance, and investment specialists.
At Modern Wealth, our team collaborates on behalf of our clients to help them enjoy today with confidence for tomorrow. We want to connect you with the people and causes that mean the most to you. We hope that these financial planning takeaways from 2025 can help you prepare for 2026 and build confidence along the way. If you want to talk through any of these takeaways or have other financial planning questions on your mind heading into 2026, start a conversation with our team below. Celebrate the new year by taking control of your financial life.
Resources Mentioned in This Article
- What Happened During the Great Recession?
- Stress Testing Your Financial Plan
- What Is a Monte Carlo Simulation?
- Navigating Economic Uncertainty: Special Market Update
- The One Big Beautiful Bill Act: What You Need to Know
- The One Big Beautiful Bill’s Impact on Your Retirement
- Managing Your Retirement Income: Tax Planning and Preparation
- 2026 Tax Brackets: IRS Makes Inflation Adjustments
- New Tax Provisions in the One Big Beautiful Bill Act
- Tax Planning: Beyond the Basics
- Do I Need a CPA and Why?
- Sequence of Returns Risk and Why Timing Matters
- What If I Retire During a Recession?
- 5 Factors More Important Than Rate of Return
- Setting Up Your Portfolio for Retirement
- Tariff Talk: What to Watch
- What Is Market Risk?
- Will I Run Out of Money in Retirement?
- Understanding Retirement Asset Allocation
- 5 Key Estate Planning Items to Address
- Reviewing Your Beneficiary Designations: When Should You Update Them?
- What Is Probate and Why Should I Avoid It?
- What Is a Living Trust and Do I Need One?
- 5 Long-Term Care Questions to Ask
- Paying for Long-Term Care Insurance vs. Self-Insuring
- Sample Financial Plan
Other Sources
[1] https://www.imf.org/en/blogs/articles/2018/11/05/blog-when-history-rhymes
[2] https://simplicityoid.com/sequence-of-returns-risk/
[3] https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview
[5] https://www.investopedia.com/world-s-11-greatest-investors-4773356
[6] https://finance.yahoo.com/news/much-richer-warren-buffett-gotten-130526483.html
Investment advisory services offered through Modern Wealth Management, Inc., a Registered Investment Adviser.
The views expressed represent the opinion of Modern Wealth Management a Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.