Some retiring purchasers could also be in conditions the place the creditor safety options of a 401(ok) umbrella may be helpful. These could be purchasers in professions that may very well be topic to lawsuits resembling docs, attorneys and monetary advisors. Even when they’re retired, these purchasers nonetheless might face lawsuits from former sufferers and purchasers.

Moreover, if retiring purchasers’ 401(ok)s supply excellent investments, leaving the cash in a Roth account in plan can enable them to reap the advantages of those investments after retirement. Any plan guidelines relating to former staff leaving funds within the plan must be thought-about as properly.

Medicare Premiums

After declining for 2023, month-to-month premiums for Medicare Half B will enhance from $164.90 to $174.70 in 2024. This represents a 6% enhance. For purchasers who will probably be topic to an income-related month-to-month adjustment quantity, often called an IRMAA surcharge, the rise within the elevated Half B premiums can be 6% from 2023 to 2024 ranges. The 2024 IRMAA surcharges are based mostly on purchasers’ 2022 revenue degree.

Shoppers who had a well being financial savings account when working can use cash from the HSA to cowl Medicare premiums for Half B, Half D drug plans, Medicare Benefit premiums plus deductibles, coinsurance and copays. HSA funds can’t be used to pay premiums for Medigap complement insurance policies.

The power to withdraw HSA funds tax-free is a good profit for purchasers with such an account, as is the flexibility to take a position the cash to assist offset future premium will increase.

Curiosity Charges

The Federal Reserve lately mentioned that whereas it’s sustaining the federal funds fee within the 5.25% to five.50% vary, the announcement additionally indicated that we will probably anticipate three fee cuts of 75 foundation factors every.

The Fed announcement might sign the tip of the comparatively excessive rates of interest on financial savings accounts, cash market funds, Treasurys, certificates of deposit and different low-risk, interest-bearing investments. These excessive rates of interest have been a boon for a lot of retirees, however decrease rates of interest may be favorable for purchasers approaching retirement as properly. 

Positions in particular person bonds or bond mutual funds and exchange-traded funds might obtain a bump as rates of interest decline. Decrease rates of interest might additionally assist the inventory portion of purchasers’ portfolios, at the very least within the brief time period.

One benefit of upper rates of interest for purchasers heading into retirement is the flexibility to lock in comparatively excessive charges on mounted annuities. If that is an applicable product to your retiring consumer, it would pay to test on present choices. 

Increased Contribution Limits

As occurs in most years, contribution limits for 401(ok)s, 403(b)s and different employer-sponsored retirement plans are rising in 2024. 

If purchasers can afford to, earlier than retiring in 2024, they need to attempt to max out contributions to their employer’s plan. This provides to their retirement financial savings totals and might present a tax profit to the extent that the contributions are made to a conventional retirement account slightly than a Roth account.

For purchasers who will probably be working for themselves in retirement, you should definitely encourage them to ascertain a self-employed retirement plan resembling a solo 401(ok) or a SEP-IRA.