Finance 101: December 2025
In December the financial advisors at Ruedi Wealth Management wrote three new columns for The News-Gazette’s Business Extra section. Make sure to look for them every Saturday in the weekend edition of the paper, but in case you missed any in December all three are below.
Lessons from 2025
Paul Ruedi
As each year draws to a close, I like to look back and think of investing lessons we can learn from it. Though the stories are always different, the lessons we can learn from them are usually the same. As I look back on 2025, I can think of several important lessons for investors to absorb from this year.
The first is that bear markets begin seemingly out of nowhere. The stock market began the year pushing to all-time highs, and though people were uncertain about how a Trump administration would impact markets, nobody predicted the tariff-induced panic that surrounded “liberation day.”
Stocks quickly went from pushing against all-time highs to dipping over 20%, and briefly entered bear market territory. The lesson for investors is to be ready to live through a temporary decline at any time, because you never know when one is right around the corner.
Though the stock market tumbled fast, it recovered fairly quickly as well. As of right now, the S&P 500 is up over 40% from its low point in April. Those who stuck with their investments were handsomely rewarded. Those who did not were severely punished.
There was never a distinct signal that the tariff-induced panic was ending. Disciplined investors simply had to wait as things got slightly less bleak little by little. Before you knew it, stocks recovered and ended up having a pretty good year. The lesson here is clear, it is extremely important to stick with your investments during the tough times if you want to reap the rewards of investing.
Another lesson from this year has to do with the performance of US and international stocks. After years of losing out to US stocks, international stocks produced higher returns this year. Though the S&P 500 is up by over 16% as I write this, international and emerging markets stocks are both up by over 20% year-to-date.
I think this performance difference has gone somewhat unnoticed because it showed up during a year when US stocks also did well. But let this serve as a reminder, US and international stocks perform differently, and it is impossible to predict which will be the winner over any given time period. It is essential to own stocks all around the globe so you can own the star performers wherever they are.
All these lessons are reminders of the things we preach every week in these columns. Discipline is essential. Diversification ensures you reap returns wherever they show up. If you aren’t able to remain disciplined and diversified, you may want to talk to a financial advisor.
Paul Ruedi is the CEO of Ruedi Wealth Management in Champaign, Illinois.
Year-End Planning: Retirement Accounts
Paul R. Ruedi, CFP
The end of the year is a great time to take a closer look at how you are saving for retirement and see if you need to make an adjustment. With several different retirement account types and moves you can make, there are plenty of year-end considerations.
You can potentially reduce your taxable income for the 2025 tax year by contributing to a Traditional IRA. You can contribute a maximum of $7,000 for 2025, and if you are 50 or older, you can contribute an additional $1,000 catch-up amount for a total of $8,000. Though the end of the year is a great time to make a contribution to an IRA, as long as you make the contribution before the 2025 tax filing deadline in April of 2026, it can still count for this tax year.
You may also want to consider contributing to a Roth IRA, which are subject to the same contribution limits as Traditional IRAs mentioned above. Contributing to a Roth IRA won’t lower your tax bill, but it will allow any funds you invest to grow tax-deferred and ultimately be withdrawn tax-free if you follow all the rules and withdraw funds when you are old enough to retire.
If you are having a lower-income year, you may want to consider a Roth conversion, switching some of your assets in a traditional 401k/IRA to a Roth 401k/IRA to take advantage of your temporarily-low tax rate. But don’t delay, Roth conversions must be done by the end of this year to count for the 2025 tax year.
You may also want to consider increasing your contributions to retirement accounts for next year, even if you maxed out your contributions this year. In 2026, the maximum an individual can contribute to a 401(k), 403(b) or 457 plan will increase by $1,000 to $24,500 per year. 401(k) catch-up contributions for those age 50 plus will increase by $1,000 to $8,000. IRA limits will also increase to $7,500 for those under 50 and $8,600 for those over 50.
If you have retirement accounts that are subject to Required Minimum Distributions, the deadline to take them out is December 31st. The one exception to this is if you turned 73 this year, in which case you have until April 1st of next year to take the required minimum distribution. The penalty for forgetting to take RMDs is steep – 25% of the amount you were supposed to take out, though this can be lowered to 10% if the issue is corrected in a timely manner.
Paul R. Ruedi is a CERTIFIED FINANCIAL PLANNER™ professional with Ruedi Wealth Management in Champaign, Illinois.
Dealing With Lumpy Retirement Spending
Paul Ruedi
Most people picture retirement spending as a smooth line. You work for decades, then you stop. You then replace your paycheck, adjust for inflation, and spend roughly the same amount every year. It’s neat. It’s comforting. Financial plans love it. It allows you to create rules of thumb for spending.
But it doesn’t capture reality. Real retirement spending doesn’t flow, it lurches. Some years cost more than you planned. A trip you’ve waited thirty years to take. A new car because the old one finally quit. A roof that gives up without warning. Helping a kid through a rough patch. An unexpected medical bill. Other years are quiet. You stay home, spend less, and wonder what the fuss was about.
Early retirement is usually the expensive part. You’re healthy, you’re mobile, and you finally have time. So you go. You do. You say yes. In the middle of retirement spending settles. Travel slows. Stuff matters less. Then, often much later, healthcare costs climb. It’s not a line. It’s a rhythm, and it doesn’t ask permission.
That’s where many retirement plans fail. They assume spending will behave. Same amount every year, like clockwork. But life isn’t a spreadsheet. It doesn’t schedule its emergencies. That’s why the purpose of a good retirement plan isn’t about predicting spending perfectly. That’s a fool’s errand. The purpose of a good retirement plan is to absorb the hits without falling apart.
Think of retirement like a long road trip. Some stretches burn more gas. Mountains cost fuel. Flat highway doesn’t. What matters isn’t how much you use on any one stretch. What matters is that you don’t run out in the middle of nowhere. When a year costs more than expected, that’s not failure. That’s Tuesday. The plan should expect it. When a quieter year follows, things will balance out.
This is why rigid rules like fixed percentages and one-size-fits-all formulas give false comfort. They look precise, but they don’t adapt. Retirement needs flexibility more than it needs perfection. The real goal isn’t spending the same amount every year.
The goal is knowing that when something important comes up you can say yes without fear. That’s what planning is supposed to give you. Not a crystal ball, but the ability to confidently live your life, lumpy years and all. If you need help with that, you may want to talk to a retirement planner.
Paul Ruedi is the CEO of Ruedi Wealth Management in Champaign, Illinois.
Disclaimer: Past performance is no indication of future results. You should not make any investment decisions without first performing your own due diligence and consulting your financial advisor.