Some retiring shoppers could also be in conditions the place the creditor safety options of a 401(okay) umbrella may be helpful. These could be shoppers in professions that might be topic to lawsuits resembling 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(okay)s provide 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 concerning former staff leaving funds within the plan needs to be thought-about as nicely.
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 shall be topic to an income-related month-to-month adjustment quantity, generally known 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 primarily based on shoppers’ 2022 earnings stage.
Purchasers 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 flexibility to withdraw HSA funds tax-free is a good profit for shoppers with such an account, as is the flexibility to speculate the cash to assist offset future premium will increase.
Curiosity Charges
The Federal Reserve just 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 are able to probably anticipate three fee 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 may be favorable for shoppers approaching retirement as nicely.
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, at the very least within the quick time period.
One benefit of upper rates of interest for shoppers heading into retirement is the flexibility to lock in comparatively excessive charges on fastened annuities. If that is an applicable product on your retiring consumer, it’d pay to examine on present choices.
Increased Contribution Limits
As occurs in most years, contribution limits for 401(okay)s, 403(b)s and different employer-sponsored retirement plans are rising in 2024.
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 might present a tax profit to the extent that the contributions are made to a conventional retirement account moderately than a Roth account.
For shoppers who shall be working for themselves in retirement, be sure you encourage them to ascertain a self-employed retirement plan resembling a solo 401(okay) or a SEP-IRA.
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