7 Moves To Make as You Plan for Retirement in 2024
Written by
Yaël Bizouati-Kennedy
Edited by
Chris Cluff
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No matter your age or where you stand in life, retirement planning is essential to ensure financial well-being, maintain standards of living and reduce stress and anxiety later in life.
Yet, with inflation, soaring rates and — for some Americans — the recent resumption of student loans, putting money aside for their golden years has taken a backseat.
With 2024 a few weeks away, financial experts shared a few tips as to what should be included in retirement plans next year, as well as steps you should take to not overlook essential aspects.
Reduce and Eliminate Debt
First, several experts agree that going into your golden years with high levels of debt puts your retirement finances at risk.
Indeed, with high levels of debt, any financial emergency or unexpected cost in retirement can literally make or break your golden years.
This is why Steve Sexton, CEO of Sexton Advisory Group, recommended implementing a debt reduction plan as part of a retirement strategy, to eliminate debt before retirement.
“When it comes to reducing or eliminating debt in retirement, small but consistent habits can lead to impactful outcomes,” said Sexton, noting that in addition to reducing non-essential spending and coming up with a strategic budget in retirement, it helps to consider debt consolidation as part of your debt management strategy.
“This is a form of refinancing that entails taking out one loan to cover all existing debts,” he said. “I also recommend negotiating with creditors to come up with a more feasible payment plan or secure lower interest rates.”
Save and Invest Any Extra Funds
Another tip is to save and invest the money you didn’t expect to receive, Sexton said.
“Whether it’s through an inheritance, a tax refund or Social Security payments, I always advise my clients to save and invest the money they didn’t expect to receive,” he said. “Doing so will come in handy when big expenses arise. Spoiler alert: They always do in your golden years!”
Contribute to Your Retirement Accounts Consistently
Aim to max out your contributions every year, if you can. If you work for an employer that offers 401(k) contribution matching, make sure you take advantage of this to boost your retirement savings in the long run, Sexton said.
Make Sure Your Emergency Fund Is Fully Funded and Inflation-Adjusted
This is another step that should not be overlooked.
“Doing so will come in handy when unexpected expenses arise. Spoiler alert: They always do,” said Sexton, adding that this will also help you lower your chances of racking up debt in the event of an accident, medical emergency or job loss.
In addition, he added that if you already have a fully funded emergency fund, it’s worth checking to see if it has been adjusted for inflation as the rising cost of living will likely shift your projected expenses.
Create a Budget
Kyle Enright, president of Achieve Lending, said that even in retirement, you should budget.
“Keep it simple,” he said. “An app, free online software, a spreadsheet or pencil and paper will do the trick.”
The starting point should be determining your goals.
“Maybe you have trips you want to take, help a grandchild pay for college or take some classes,” he said. “Whatever they are, write them down, and then build your budget with them in mind. You’ll see, in black and white, just what you have and where you want to go.”
Don’t Forget About Healthcare Costs
As you get older, healthcare becomes a big part of your budget. In turn, Jeff Rose, CFP and founder of Good Financial Cents recommended considering a health savings account (HSA), if you’re eligible.
He explained, “HSAs have triple tax advantages: Your contributions are tax deductible, the money grows tax free and withdrawals for qualified medical expenses are also tax free.”
Have a Fallback Plan
Every plan — even the most detailed one — should have a backup. Retirement plans are no different.
Yet, this is an aspect of retirement that most people don’t even consider, said Peter C. Earle, senior economist at American Institute for Economic Research.
“What happens if the plan is postponed for five years?” he said. “What happens if it has to happen two years earlier than expected? Having some contingency plans laid out, even if fuzzy, may encourage the kind of thought that leaves one better prepared in the case of unexpected, sudden developments.”
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