How to reassess your finances this summer, prepare for surge in retirement population

With summer rolling into the Valley and many finding respite from their day-to-day work, it is a good time to check your finances and ensure success throughout the end of 2025.

Many ask if they should be making catch-up contributions to their IRA or 401(k).

According to Asset Preservation Wealth & Tax’s Stewart Willis, the answer is “generally yes.” This is because you are only able to access these retirement funds once you reach 59 1/2.

“You want to make sure you have an emergency fund there,” Willis said on the latest edition of The Asset Preservation Hour. “We are seeing the workforce change dramatically. You might not understand the impact of it yet, but artificial intelligence is going to change the landscape of employment.”

Before even considering contributions, it is vital to have a working financial plan or a “road map,” in the words of Willis.

“Does it make more sense to contribute more money into your IRAs or 401(k)s, or your 403(b)s or your Roth accounts? It should all make sense for the end goal,” Willis said.

And with these considerations, you have to weigh whether the same funds you began targeting 5-10 years or longer ago are still the best option.

A full-time working individual can take on the “full risk of the market” with a number of full equity funds, according to Willis. But as you creep closer to retirement age, Willis warns that you won’t be able to “tolerate” market instability as easily.

“That’s why people start rebalancing (their accounts) for lower risk when it comes to retirement,” Willis said.

“We see people just taking extraordinary amounts of risk. … What we’ve seen, even at the beginning of this year, is that those people saw losses that they didn’t expect.”

For example, some people sold assets right as massive tariffs threatened, missing out on payoff when the market quickly rebounded.

“That’s why it’s important to be invested and stay invested at the right risk level for you,” Willis said. “Stop worrying about what your friends are doing. Do what’s right for you.”

Is an annuity a good or bad thing for my finances?

The answer to this question is a complicated one for Willis because he said annuities have “gotten a bad rap.”

“It’s because they pay upfront commissions to the people selling them,” Willis said of the roughly 8-9% commissions that annuities can bring.

Sellers of annuities may claim you will receive a certain percentage of guaranteed income with retirement. Willis, however, warned that they may be only “handing you back your own money” and adding nothing to your principal balance.

“It doesn’t mean your balance is going to stay the same. … We’re interested in making interest in your money principal, growing and being able to replace itself,” Willis said.

How will growing retirement population impact my investments?

The nationwide retirement demographic (ages 65 and older) is at about 58 million but will grow to 80 million by 2040, according to Willis.

Once those in the group begin pulling out of their financial accounts, Willis said you will see the stock market rise. But as more and more people shift from contributors to withdrawers, the “selling environment” will make people think about the market differently.

“I think more people were aggressive in the market because they got lulled into the safety of the stock market because when the market does well, people forget about the risks that it poses,” Willis said. “I do like maximizing retirement accounts … but it’s also important to make sure you have access to tax-free money in retirement.”

In step with maximizing these accounts, Willis said it’s important to identify a proper tax strategy so that you will be able to use assets when most needed. Tax-deferred investments can be good, but Willis added that making all your investments fit this billing can handcuff your ability to use them.

Claim a free portfolio review by Asset Preservation Wealth & Tax online or call 877-573-8437 for more information.

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