New Job, New Approach: Your Guide to a Smarter 2025 Retirement Strategy

The new year is a great time to revisit your retirement strategy — and that’s especially true for those starting a new job in 2025. If the latter is true for you, this could be the perfect time to reevaluate your retirement savings strategy and ensure it is in alignment with your new role.

The 411 on 401(k) Rollovers

When starting a new job, it is crucial to shore up your savings from your previous one. If you left behind a 401(k) with your old employer, there are several possibilities for the funds, depending on the account’s total balance.

Your former employer can cash out balances under $1,000. However, the money should be deposited into a new retirement account within 60 days, or it will be considered taxable income and may incur an additional 10% early withdrawal penalty for those aged 59 ½ or younger.

For accounts with balances of $1,000 to $5,000, your former employer can roll the money into an IRA they designate.

If your account balance is over $5,000, your employer can’t move the funds, but you have the option to roll that money over yourself into an IRA of your choice. Opting for a direct rollover is a tax-efficient way to move retirement funds. It avoids penalties and ensures your savings stay invested. This strategy also consolidates your accounts while giving you more control over your investments and future contributions.

Staying Ahead of the Game

The next step involves working with your new employer’s retirement options. Unfortunately, joining a new company doesn’t always mean immediate access to a 401(k). Some companies require new employees to work for a set amount of time before opening and contributing to an employer-sponsored retirement account.

If that’s the case, consider opening an IRA to avoid losing valuable time. You can continue to make contributions to this account (and benefit from compound interest in those investments) while you wait to become eligible for an employer-sponsored account. Setting up automatic transfers directly from your bank account may also help relieve the stress of remembering to contribute consistently.

Some will also open a Roth IRA in this situation since the earnings on contributions to these accounts grow tax-free. However, it’s important to note that this type of IRA comes with income limit stipulations. For 2025, the annual income limit for Roth IRAs is $236,000 for joint filers and $150,000 for single filers.

Turbocharge Your Savings

If you do take advantage of a new employer’s 401(k), be sure to carefully review the details of the plan, such as the matching policy. It is best practice to contribute at least enough to take full advantage of employer matching programs.

On that note, if your new job comes with a new salary, it may be worth increasing your budget for contributions, if possible. This is especially true for those 50 and older, who can leverage catch-up contributions to further boost savings. Even a small increase in your contribution percentage can substantially impact your future retirement income.
The new year is a great time to make sure your 2025 retirement strategy is setting you up for success in the years to come. Need a hand while re-evaluating your retirement strategy? The advisors at Griffin Asset Management are here to help.

Sources:

USA Today: New job for 2025? Here are 3 essential retirement moves to make right now

Fidelity: Roth IRA income limits for 2024 and 2025

GOBankingRates: I’m a Retirement Planner: 4 Moves To Make as Soon as Possible in the New Year