Consider These 4 Tweaks to Your 2026 Financial Plan

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It's not too late to set goals for the year, so I'm going to add one more to your plans to get a gym membership and eat more healthily: Complete a financial plan in 2026.

While it's good to have a financial plan at any time, there are a few reasons why it's particularly important to get planning this year:

1. Interest rates have fallen

Interest on money market account s and CDs is generally decreasing following the Federal Reserve's rate cuts in 2024 and 2025. Cash may be less attractive than it used to be. It may be time to consider alternatives.

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A high-quality municipal bond ladder offers a nice way to earn tax-advantaged income. Although you don't get the same principal guarantees as cash or CDs and municipal bonds are subject to interest-rate sensitivity and credit risk, holding a bond to maturity, in a ladder for instance, can help provide predictable cash-flow planning.

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Alternatively, if you have cash on the sidelines, and a long-term investment horizon, you could consider dollar -cost averaging into a diversified mix of stocks, bonds, real estate and commodities for your long-term money.

2. The stock market tables have turned

Reviewing the Callan Periodic Table of Investments is a must for financial advisers and money managers. The table lists the best-performing asset class to the worst every year. Many trends can be spotted. Especially the unloved sectors.

Not many investors were interested in international stocks before 2025. US stocks were the place to be. But that script flipped, as European and emerging markets mostly had a terrific year.

Rather than reacting to short‑term themes or herd mentality, investors may benefit from ensuring their portfolios remain diversified and aligned with long‑term goals.

It's also a good time to check your asset allocation (mix of stocks and other investments) to make sure the level of risk you are taking in your portfolio is appropriate.

Investors may own more stocks if they outperformed in 2024 and 2025, so it's a good time to see if rebalancing the portfolio makes sense.

3. Income tax deductions have changed …

There are several important income tax changes beginning in 2026. The standard deduction increases for 2026 to $32,200 for a married couple filing jointly, up from $31,500.

There is also a new deduction for people who are age 65 and older and a significant increase to the state and local tax itemized deduction (SALT) — the SALT cap increases to $40,000 for 2026.

These changes should help many. It might be a good time to review and adjust your income tax withholding if necessary.

There is also a new charitable deduction available in 2026. For cash gifts to a qualified charity — not gifts to donor-advised funds — you can deduct $1,000 for single filers and $2,000 if married filing jointly.

Be sure to hold on to bank records or the charity acknowledgment letter for proper IRS recordkeeping.

4. … And so have rules on retirement plan contributions

Saving in a 401(k), 403(b) or Thrift Savings Plan? You'll be happy to hear the contribution limit increases to $24,500, an increase of $1,000. The age-50 catch-up increases to $8,000 from $7,500 for those between the ages of 50 and 59.

And there is now a "super catch-up" for workers aged 60 to 63 of $11,250 (this is not in addition to the over-50 catch-up).

If you are saving in one of these retirement plans, you may want to review whether increasing your payroll contributions aligns with your cash-flow needs.

Also new for 2026, high-income earners — those earning more than $150,000 in prior year wages — will see their catch-up contributions go to the Roth 401(k) account, assuming your plan has a Roth 401(k) account.

If your retirement plan has no Roth 401(k) account, then no catch-up contribution is allowed if you are one of these high-earners.

Higher-income earners should speak with their financial or tax adviser regarding this new mandatory Roth catch-up contribution. If your catch-up contributions are going into the Roth account, where should your regular contributions go? Pretax or Roth?

The new year is an exciting time. It's a fresh start and a time for optimism. It's also a great time for financial planning.

The author is a CERTIFIED FINANCIAL PLANNER with more than 25 years of experience. For more information on this article, please email the author, Michael Aloi, at maloi@sfr1.com.

Investment advisory and financial planning services are offered through Summit Financial LLC, a SEC Registered Investment Adviser, 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600. This material is for your information and guidance and is not intended as legal or tax advice. Clients should make all decisions regarding the tax and legal implications of their investments and plans after consulting with their independent tax or legal advisers. Individual investor portfolios must be constructed based on the individual's financial resources, investment goals, risk tolerance, investment time horizon, tax situation and other relevant factors. Past performance is not a guarantee of future results. The views and opinions expressed in this article are solely those of the author and should not be attributed to Summit Financial LLC. Summit is not responsible for hyperlinks and any external referenced information found in this article.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Michael Aloi is a CERTIFIED FINANCIAL PLANNER™ Practitioner and Accredited Wealth Management Advisor℠ with Summit Financial, LLC. With 21 years of experience, Michael specializes in working with executives, professionals and retirees. Since he joined Summit Financial, LLC, Michael has built a process that emphasizes the integration of various facets of financial planning. Supported by a team of in-house estate and income tax specialists, Michael offers his clients coordinated solutions to scattered problems.