Joe Lucey

The U.S. Treasury’s announcement to discontinue the penny marks a significant shift in American currency policy. While this may seem like a minor change, there are several areas of impact worth discussing.

The Economics of Penny Production

The decision to eliminate the penny is, at its core, an economic one. According to the U.S. Mint’s 2023 Annual Report, it costs 3.69 cents to produce and distribute each penny. With approximately 3.2 billion pennies minted in 2024, this equates to a loss of roughly $118 million in production costs.

The composition of the penny has evolved over time in an attempt to reduce these costs. Since 1982, pennies have been made of 97.5% zinc with a thin copper plating. Even with this cost-saving measure, the penny remains unprofitable to produce.

International Precedent

The United States would not be pioneering this change. Several countries have successfully eliminated low-denomination coins:

• Canada discontinued its penny in 2012
• Australia eliminated its one and two-cent coins in 1992
• New Zealand removed its one and two-cent coins in 1990

Studies from these countries provide valuable data on the transition’s impact on inflation, consumer behavior, and retail operations.

What This Means for Consumers

The most common concern about eliminating the penny involves pricing and rounding. Based on international models, here’s how you can expect pricing to work:

Credit cards, debit cards, checks, and electronic payments maintain exact pricing. No rounding occurs. For cash transactions, costs will be rounded to the nearest five cents. 

• $0.01 and $0.02 round down to $0.00
• $0.03 and $0.04 round up to $0.05
• $0.06 and $0.07 round down to $0.05
• $0.08 and $0.09 round up to $0.10

According to a 2014 study by the Bank of Canada, the impact of rounding on consumers was negligible. Most businesses absorbed small rounding differences rather than adjusting their overall pricing strategies. Some transactions rounded up, others down, resulting in a wash. Similarly, the Bank of Canada’s study found no measurable inflationary impact from penny elimination.

For the average consumer, the transition will likely be seamless. During the transition period, pennies remain valid for all transactions and banks will continue to accept pennies for deposit or exchange.

Don’t Pinch Pennies When It Comes to Your Future

The penny may be going away, but the principle behind “a penny saved is a penny earned” continues to remain true. The key is making sure you’re not so focused on the pennies that you miss the dollars. Don’t let uncertainty about retirement keep you counting pennies when you should be building wealth. 

Ready to get more than just our two cents on your retirement strategy? Let’s sit down and create a comprehensive plan that helps you maximize every dollar you’ve worked so hard to earn.

Give us a call at 952-460-3290.

The holiday season brings plenty of to-do lists. There are countless gifts to buy, meals to prepare and parties to host, but before the year wraps up, it’s worth adding a quick check-in on your financial picture too.

December 31st isn’t just the end of the calendar year. It’s also a deadline for several financial decisions that can impact your 2026 taxes and retirement trajectory. Before the ball drops, consider these questions:

Have You Taken Your Required Minimum Distributions (RMD)?

For those 73 and older, the IRS requires a minimum withdrawal from your tax-deferred retirement accounts each year. Miss this threshold, and you could face a 25% penalty tax on whatever you failed to withdraw.

It’s also worth considering whether there are strategies to reduce your RMD burden in the future. Having a conversation with your financial planner sooner, rather than later, is the best way to avoid being pushed into a higher tax bracket.

Is This the Year for a Roth Conversion?

Converting traditional IRA funds to a Roth can provide tax-free withdrawals in retirement, but the details matter. Your goal should be to stay within your current tax bracket while still making meaningful progress.

For example, if you are single and will earn $180,000 this year, you fall into the 24% tax bracket, which ranges from $103,351 to $197,300 for tax year 2025. That means you can convert up to $17,300 ($197,300 – $180,000) without being pushed into the next bracket and paying higher federal income taxes.

Whether a conversion makes sense depends on your income, your other deductions, and your expectations for future tax rates. It’s best to consult with a financial advisor before making any big decisions.

Are Your Retirement Contributions on Track?

If you’re still working, the end of the year is a natural time to review whether you’re maximizing your retirement contributions. Here are three key questions we recommend talking over with your investment advisor:

• Are you capturing the full employer match?
• Could you increase your contributions for the final months of the year?
• Are catch-up contributions part of your strategy?

These decisions compound over time. A few adjustments now can make a meaningful difference down the road.

The Value of a Year-End Review

None of these questions have universal answers. What makes sense for your neighbor or your colleague may not make sense for you. The right strategy depends on your unique situation, your income, your goals, your comfort level, and your vision for retirement.

What matters is taking the time to ask the questions before the window closes.

If any of these topics sparked a “I should probably look into that,” let’s talk before the year ends. A brief conversation now could save you from missed opportunities later.

At Secured Retirement, we’re here to help you maximize your earnings and save on taxes so you can live the retirement of your dreams.

Give us a call at 952-460-3290.

Giving back not only benefits your community—it can also benefit your budget when planning for retirement. Charitable contributions can have significant tax benefits for pre-retirees and retirees alike. As with any financial decisions, check with your advisor before making changes. But consider these tax benefits for charitable giving.

Tax Benefit: Standard vs. Itemized Deductions

For 2025, the standard deduction thresholds are:

• Single; Married Filing Separately: $15,750
• Married Filing Jointly; Surviving Spouses: $31,500
• Heads of Households: $23,625

In 2025, families that elect a standard deduction will also be enabled to deduct an additional $1,000 per taxpayer on the return ($2,000 for a married filing joint couple).

Most, itemized deductions are only beneficial if they push you over the threshold for standard deductions. More families who have been taking a standard deduction may find that they are once again allowed to itemize on this year’s return due to the potential increase of SALT (State and Local Tax) write-offs which have increased for families with $500,000 AGI and under. 

If you will potentially itemize your tax return in 2025, or if you’re close to the standard deduction threshold, you may want to consider making a few extra donations this holiday season to reap the maximum tax benefits.  Consulting with a qualified tax preparation expert may be a good idea prior to year-end to see how additional charitable gifts may allow you greater deductions against your income this year. 

Alternatively, you could plan ahead for 2026 by using the “bunching” strategy. By contributing two years’ worth of your annual charitable contributions to a Donor Advised Fund (DAF), you could itemize your deductions for 2025 and still claim the standard deduction for 2026, potentially increasing your overall deduction across the two years.

Another potential benefit? Directly donating appreciated non-cash assets (such as stocks, mutual funds, or even personal property) to a DAF. You can avoid capital gains taxes on these assets and still support your favorite charities.

Remember: Documentation is Required to Maximize Deductions

The IRS is strict on documentation when it comes to charitable tax benefits. You’ll need written proof of all your donations. Additionally, only recognized charitable organizations count as qualified donations.

If you’re donating non-cash assets, you’ll want to be aware of the fair market value (FMV) to avoid paying capital gains taxes. You’ll also need to use a special form to deduct these contributions (Form 8283).

Note: If you donated funds and received a benefit in return (such as a ticket to an event), that counts as a quid pro quo donation. You’ll only be able to deduct the difference in value between your donation and the benefit received.

Retirement Strategy: Building Charitable Giving into Your RMD Plan

If you’re already retired, there are strategies for reducing your overall taxable income by contributing more to charities. A qualified charitable distribution (QCD) is a tax-free transfer directly from an IRA to a qualified charity, which can satisfy your required minimum distribution without increasing your taxable income. You pay less in taxes, and charities receive the funds they need to survive. It’s a win-win!

Make Your Charitable Giving Work Harder for You

Feeling inspired to give more? We can help you get the most out of your charitable donations so you see the tax benefits you deserve. Let’s discuss your current contributions and set a plan to maximize during the season of giving.

Give us a call at 952-460-3260.