What issues top consumers’ list of financial goals for 2025?

As the new year approaches, Americans are prioritizing financial health in their resolutions and goals, with many of them focused on debt reduction and money management, according to CFP Board’s latest research, Debt and New Year’s Resolutions Report.

Nearly all (97%) who were surveyed identified having at least one financial priority for 2025. Topping the list of 2025 financial goals is reducing debt (42%), followed by saving for a major purchase such as a car, a house or vacation (21%), and retirement planning (14%).

In addition, nearly 9 in 10 Americans reported facing obstacles that could hinder them from achieving their 2025 resolutions, namely, having too many financial burdens and not enough resources to address them. Key barriers include managing too many expenses (38%) and facing high levels of debt (30%). More broadly, Americans are concerned about debt’s long-term effect on their financial well-being (52%) and on their life plans (48%).

Half of Americans with some debt reported difficulty in managing at least one type of debt. Seven in 10 with substantial medical debt expressed difficulty in managing that debt, while 60% of Americans with high levels of credit card debt reported similar struggles.

Credit card and housing debt in particular pose significant challenges for many Americans, the survey said. High credit card balances make it difficult to reduce reliance on credit or pay more than minimum payments, which prolongs debt repayment. And housing debt also creates a burden, prompting some to explore refinancing to ease financial pressure.

Plans for reducing debt next year

Nine in 10 Americans are actively working to reduce their burden of debt in 2025, focusing on reducing spending, increasing income, and managing debt more effectively.

To cut back on spending, many are lowering discretionary expenses (like dining out and streaming services), sticking to budgets and choosing more affordable options like store-brand products. On the income side, some are actively seeking opportunities to boost their earnings, recognizing the importance of increasing their financial resources.

For debt reduction, the survey said, many Americans are embracing structured strategies like increasing loan or credit card payments and exploring debt consolidation. However, a considerable number of Americans feel uncertain about how to start, or they lack access to financial guidance. This underscores the need for better financial education and support systems, the survey said.

Financial advisors offer support

For those consumers who are uncertain about their finances, guidance from a financial professional can provide clarity. In fact, 1 in 4 Americans work with a financial planner, such as a certified financial planner, for advice on managing debt and creating a holistic financial plan, the survey said.

“Our research reveals a strong desire among Americans to improve their financial well-being, but there’s a clear need for more resources and guidance, especially with navigating debt and budgeting effectively,” said Kevin Roth, managing director of research at CFP Board. “One of the most significant findings is that Americans need to feel more equipped to take actionable steps. Working with a CFP professional offers a starting point for many to begin this journey.”

Debt’s negative effects on retirement savings

Americans are correct in making debt payment a priority for 2025. According to another survey, this one by Allianz Life Insurance Company of North America, many Americans said that debt has hindered their retirement savings. Among Americans who wish they had saved more for retirement, 46% said that non-housing debt from car loans, credit cards and student loans are keeping them from additional saving. Millennials (56%) more than Gen Xers (50%) or boomers (35%) feel that non-housing debt is limiting their retirement savings.

Housing debt is also significantly affecting Americans’ ability to save for retirement, the Allianz survey said. More than one in three Americans (34%) who wish they had saved more said that housing debt is keeping them from saving for retirement. And Gen Xers (39%) more than Millennials (33%) and boomers (34%) feel this way.

“Debt can have a significant impact on achieving long-term financial goals like retirement,” said Kelly LaVigne, VP of consumer insights, Allianz Life Insurance Company of America. “It is important to find a balance between paying off debt and saving for your financial future. Limiting retirement saving because of debt can leave you vulnerable to outliving savings in retirement.”

Working with clients to lower debt

So, how can financial professionals work with clients to reduce their debt?
“The only way to effectively pay down debt is to have a plan for how you will do it,” said LaVigne. “By helping clients pay down debt, financial professionals will enable their clients to then work toward retirement goals.’

Clients’ plans should include details about the type of debt that they carry. “Not all debt is equal,” LaVigne said. For example, high-interest rate debt from credit cards should be paid off before lower-interest rate debt, like a mortgage.

Interest rates can vary between student loans, and it is important to determine the interest rate before encouraging clients to pay off those loans prematurely. “This helps to prioritize which debts should be paid first,” LaVigne said.

In addition, LaVigne said that there may be support available through an employer, who can help a client find balance between paying off debt and saving for retirement. “Some clients may have a benefit through their employer that will help ease the burden of student loans by having payments on student loans qualify for a match on their 401(k) or other employer-sponsored plan, as allowed under recent tax law changes,” he said.

The plan should also include what a client will do after paying down debts and freeing up funds, LaVigne added. “Once something like a car loan is paid off, make a plan for that money so it doesn’t get spent and disappear,” he said.

Allianz Life conducted the 2024 Annual Retirement Study online survey in February and March 2024 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) or investable assets of $150k+. The study included an oversample of respondents who identified as Black/African American (416 responses); Hispanic (398 responses); Asian/Asian American (366 responses).

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