In 2024, retirement planning will appear different because of measures enacted by Congress. This year, retirement savers will have more factors to think about, such as student loan payment matching, obligatory withdrawals for Roth 401(k) plans, 401(k) contribution caps for older workers, and rainy day funds. However, a lot of advise on Social Security, risk, location, inflation, healthcare, working in retirement, and the importance of sound counsel never goes out of style. Speak with a financial expert for the most recent advice on retirement savings.
New Retirement Tips for 2024
Let’s start by examining some recent developments in the retirement market. The manner people can invest for retirement has changed significantly since the Secure Act. 2.0 was passed in 2022. Here are some pointers for using some of these new skills:
1. First, let’s look at some new features in the retirement scene. Safety law. Retirement Insurance 2.0 goes into effect in 2022, revolutionizing the way people save for retirement. Here are some tips about some of these new options.
2. Check to see if your employer’s defined contribution savings plan offers a Roth account, which acts like an emergency savings account. These new additions to the retirement toolbox allow donors to contribute up to $2,500 per year tax-free and penalty-free with four withdrawals per year. Employers can also double their contributions.
3. Pay off your student loans and save for retirement. As employees pay their student loans, employers can now make matching contributions to their retirement plans. This allows employees to reduce their education loans while keeping their retirement savings on track.
4. If you’re 60 to 63 years old, increase your 401(k) savings. This one won’t really be available until 2025, but employees between the ages of 60 and 63 can make a special catch-up contribution after the last day of 2024, up to a maximum of $10,000 or 150% of the annual catch-up limit. After then, the cap is raised every year to account for inflation.
Retirement Tips That Never Gets Old
In addition to these new tips, consider our tried-and-true advice for retirement savers:
1. Delaying Social Security. If you wait to claim Social Security after age 62, your monthly benefits will increase. Although it’s not always the right move for all savers, it’s wise to at least consider waiting until full retirement age, or even beyond.
2. Understand the risk sequence of returns. If you retire during a bear market and start withdrawing money from your retirement account, you could run out of money faster than you planned. This is due to a set of return risks, and in addition to not exiting if the market crashes, you can manage risk by conservatively estimating investment returns and diversifying your portfolio.
3. Choose the right place to retire. Where you live after retirement has a significant impact on your retirement living expenses. By choosing a low-cost location, you can enjoy a more comfortable and secure retirement without having to save more while working.
4. Inflation account. The increase to 8.7% annual rate in 2022 was a reminder to everyone of how rising prices can erode the purchasing power of decades of hard-earned savings. You can counter this by using inflation-protecting investments such as stocks and short-term bonds, and by being prepared to cut spending if necessary.
5. Medical Expense Plan. Health care costs generally increase with age, so careful retirement planning can help you prepare for this eventuality. To do this, save in a health savings account now, budget for higher Medicare Part B premiums later, and see if you can factor long-term care premiums into your budget.
6. Work if you want. Just because your career is over doesn’t mean you should or should quit your job. Working part-time in retirement can be satisfying and provide income that can supplement your savings or help you buy luxury items.
7. Get the right financial advice. These tips just scratch the surface of the knowledge you need to create a solid retirement financial plan. And there’s no better way to ensure you’re well-informed on this important topic than to seek advice from a financial advisor.
Final Thought
Employer matching of student loan payments can be used to fund retirement accounts, avoid RMDs, make use of new options for building emergency savings, and contribute to your 401(k) catchup. All of these strategies will help you plan for retirement in 2024. Additionally, bear in mind tried-and-true advice on when to retire and how to claim Social Security, how to budget for health care and inflation, where to retire and where to live, how to increase your possibilities by taking on part-time employment, and how to get the finest financial assistance available.
Retirement Planning Tips
Work with your financial advisor to stay up to date on financial planning. SmartAsset’s free tools connect you with up to three certified financial advisors in your area. You can also do a free discovery call with a matching advisor to determine which advisor is right for you. If you’re ready to find an advisor who can help you reach your financial goals, get started today.
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