Some retiring shoppers could also be in conditions the place the creditor safety options of a 401(ok) umbrella will be useful. These is perhaps shoppers in professions that could possibly be topic to lawsuits equivalent to docs, attorneys and monetary advisors. Even when they’re retired, these shoppers nonetheless could face lawsuits from former sufferers and shoppers.
Moreover, if retiring shoppers’ 401(ok)s supply excellent investments, leaving the cash in a Roth account in plan can permit them to reap the advantages of those investments after retirement. Any plan guidelines concerning former staff leaving funds within the plan must be thought of as effectively.
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 shoppers who might be topic to an income-related month-to-month adjustment quantity, referred to as an IRMAA surcharge, the rise within the elevated Half B premiums can also be 6% from 2023 to 2024 ranges. The 2024 IRMAA surcharges are based mostly on shoppers’ 2022 earnings 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 shoppers 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 not too long ago mentioned that whereas it’s sustaining the federal funds charge within the 5.25% to five.50% vary, the announcement additionally indicated that we will doubtlessly anticipate three charge cuts of 75 foundation factors every.
The Fed announcement may 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 will be favorable for shoppers approaching retirement as effectively.Â
Positions in particular person bonds or bond mutual funds and exchange-traded funds may obtain a bump as rates of interest decline. Decrease rates of interest may additionally assist the inventory portion of shoppers’ portfolios, a minimum of within the brief time period.
One benefit of upper rates of interest for shoppers heading into retirement is the flexibility to lock in comparatively excessive charges on mounted annuities. If that is an acceptable product to your retiring shopper, it would pay to verify on present choices.Â
Greater 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.Â
If shoppers 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 may present a tax profit to the extent that the contributions are made to a standard retirement account fairly than a Roth account.
For shoppers who might be working for themselves in retirement, be sure you encourage them to determine a self-employed retirement plan equivalent to a solo 401(ok) or a SEP-IRA.
