Core Insights - As the new year approaches, individuals are encouraged to set financial goals, particularly focusing on enhancing retirement savings through appropriate account choices [1]. Group 1: Retirement Account Options - Many individuals appreciate the immediate tax benefits of traditional IRAs, while Roth IRAs offer tax-free growth and withdrawals in retirement [2][7]. - Choosing a Roth IRA may be advantageous for those in lower tax brackets, as they can benefit from tax-free withdrawals later when they may be in higher tax brackets [3][4]. - Concerns about future tax rate increases make Roth IRAs appealing, as they allow individuals to lock in their current tax rate, ensuring tax-free withdrawals regardless of future tax changes [5][6]. Group 2: Flexibility in Retirement Savings - Roth IRAs provide greater flexibility for future withdrawals, accommodating potential changes in financial needs post-retirement [8].

- Getty Images/iStockphoto Dear Dan, I’m 72 years old and have my IRA in stock. I start required minimum distributions next year so I want to convert to a Roth IRA. How much should I convert? Should I do it all at once or should I do it on a year to year basis? — Ready to Convert Most Read from MarketWatch Dear Ready, A careful analysis year to year is usually better than converting the whole thing just to avoid required minimum distributions (RMD) but there are several variables to consider. When y ...

Tax Bracket Adjustments - The IRS adjusts tax brackets annually to account for inflation, preventing "bracket creep" [1][2] - Due to inflation adjustments and an increased standard deduction, taxpayers may pay slightly less in 2025 compared to 2024, even with the same income [3] Tax Benefits for Seniors - Seniors aged 65 or older receive a temporary $6,000 tax deduction in addition to the standard deduction for the years 2025-2028 [4] - The $6,000 deduction for seniors is phased out for individuals with income at $75,000 and couples at $150,000 [4] - Changes to Medicaid may impact seniors, potentially raising costs related to long-term care [5] State and Local Tax (SALT) Deduction - The SALT deduction has increased to $40,000 [5] - Taxpayers in states with high local and state taxes who itemize their deductions could significantly benefit from the raised SALT deduction [6][7] Tax Planning Strategies - Bunching deductions, such as charitable contributions, can help taxpayers exceed the standard deduction and maximize tax savings [8] - Bunching can also be applied to medical expenses to surpass the required percentage for write-offs beyond the standard deduction [9]