11 Retirement Planning Tips for 2024

Planning for retirement has a new look in 2024, thanks to changes brought about by Congress. Retirement savers this year will find fresh things to consider when it comes to rainy day savings, 401(k) contribution limits for older workers, rules on mandatory withdrawals for Roth 401(k) plans and student loan payment matches. At the same time, many retirement planning tips concerning Social Security, risk, location, inflation, healthcare costs, working in retirement and the value of good advice remain evergreen. If you want the latest up-to-date tips on saving for retirement, speak with a financial advisor.

First, let’s look at some new features on the retirement scene. The Secure Act. 2.0 enacted in 2022 made significant changes to the way we can save for retirement. Here are tips relating to some of these new abilities:

1. Check to see if your employer’s defined contribution saving plan offers Roth accounts that act like emergency savings accounts. These new additions to the retirement toolbox allow contributors to put in up to $2,500 annually and make four withdrawals a year free of taxes or penalties. Plus, employers can match contributions.
2. Save for retirement by paying student loans. When employees make payments toward student loans, employers can now make matching contributions to their retirement plans. This lets workers reduce education debt while staying on track with retirement savings.
3. Save in a Roth 401(k) without worrying about required minimum distributions (RMDs). Until this year, workplace Roth account holders had to start taking RMDs by age 73. Now they can leave money in the accounts until they are ready to withdraw it.
4. Save more in your 401(k) if you’re age 60 to 63. This one actually won’t be available until 2025, but after the last day of 2024 workers aged 60 to 63 can make a special catch-up contribution of the greater of $10,000 or 150% of the standard catch-up limit for that year. After that, the limit adjusts annually for inflation.

In addition to these new tips, consider these tried-and-true bits of advice for retirement savers:

1. Delay Social Security. Waiting to claim Social Security past age 62 raises your monthly benefit amount. It’s not always the right move for every saver, but it is wise to at least consider waiting until full retirement age or beyond.
2. Understand sequence of returns risk. If you retire during a bear market and start withdrawing from retirement accounts, you may run out of money before you planned. This is due to sequence of returns risk and, aside from not retiring when markets are slumping, you can manage it by using conservative investment earnings estimates and diversifying your portfolio.
3. Choose the right place to retire. Where you retire has a major effect on your post-retirement living expenses. If you pick a location with low costs, you can have a more comfortable and secure retirement without having to save more while you are working.
4. Account for inflation. The spike in 2022 to an annual 8.7% rate reminded everyone how rising prices can erode the purchasing power of hard-earned savings over decades. You can cope by using inflation-fighting investments such as stocks and short-term bonds, and being ready to reduce spending if need be.
5. Plan for healthcare costs. Medical bills generally rise as we age, and a well-thought-out retirement plan will prepare for that eventuality. You can do this by saving now in a health savings account, budgeting for higher Medicare Part B premiums later and seeing if you can fit premiums for long-term care insurance into your budget.
6. Work if you want to. Just because your career is complete doesn’t mean you must or should quit working. Part-time employment in retirement can bring satisfaction as well as supplying income to help you stretch out savings or pay for luxuries.
7. Get good financial advice. These tips barely scratch the surface of the knowledge it takes to prepare a solid plan for funding retirement. And there’s no better way to ensure you are well-informed on this vital topic than to get the guidance of a financial advisor.

To plan effectively for retirement in 2024, be aware of new opportunities to build emergency savings, make 401(k) catchup contributions, avoid RMDs and use employer matches of your student loan payments to fill your retirement accounts. Also keep in mind time-tested tips on timing your retirement and claiming Social Security, preparing for inflation and health costs, picking the best retirement location, using part-time work to expand your options and, finally, getting the best financial advice you can find.

• Stay up to date on the latest in financial planning by working with a financial advisor. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• It’s always a good idea to know whether you’re saving enough for retirement, and SmartAsset’s retirement calculator can give you the answer.  

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