Is 2024 going to be "The Year?" Are you aiming for retirement and starting to get serious about comprehensive planning?
Or perhaps you're already retired and wondering if your financial plan needs to prepare for what could be a tumultuous year both politically and economically.
In either case, Keen Wealth's philosophy is consistent: plan for what you can anticipate so that you can adjust to the unexpected. Your 2024 retirement planning checklist should start with these seven items.
1. Account for inflation.
Until recently, inflation rates have been in decline. However, you're still likely paying more for some things than you were a couple of years ago. That's likely to be the case in 2024 as well. The Social Security Administration will announce its annual cost of living adjustment (COLA) on October 12th, which will help seniors cover some of those higher costs. But experts predict a much smaller increase than last year's historic 8.7%.
Work with your financial advisor to review your monthly budget. Take note of any regular expenses that have risen, or that could rise. Review any expenses that you could reduce or even eliminate in retirement, such as subscriptions you aren't using or vehicles that have been sitting in the driveway since the kids moved out.
2. Make a plan for your Social Security benefits.
If you don't need Social Security to cover your monthly expenses or a major financial goal (such as early retirement), it's almost always best to delay taking your benefits until you reach full retirement age. The size of your benefit will continue to grow, including those annual COLA adjustments. And if you're married and the higher earner, the potential survivor's benefit will grow as well.
3. Be aware of the “sequence of return” risk.
A common worry among folks who are reluctant to retire is that market volatility is going to drag down their portfolios just as they're no longer receiving a paycheck. This "sequence of return" risk is a legitimate concern. But if you let the markets determine your "right time" to retire, you might end up working longer than you have to at the expense of some well-deserved retirement goals.
Coping with market volatility is one of those things you can anticipate and plan for. Talk to your advisor about some of the strategies available to you if 2024 has some ups and downs, such as adjusting your withdrawal rate or looking for opportunities to "buy low" and rebalance your portfolio.
4. Choose the best healthcare plan for your needs.
If you're retiring at age 65 or later, the short answer here is Medicare.
However, Medicare doesn't cover everything, including dental, eye exams, hearing aids, and long-term care. Also, if you or your spouse are taking prescription drugs or have ongoing health issues, it's important that you understand the finer points of the plans available to you.
As for early retirees, you might be able to use COBRA to stay on your current plan until you turn 65. Or, if you can’t jump on a working spouse’s plan, you'll have to purchase health insurance from your state's marketplace. But, as we discussed on a recent podcast, these options can be very expensive.
To identify a plan that will cover all your needs at the best price point, we recommend working with a healthcare professional and coordinating with your financial advisor.
Reminder: current retirees who are on Medicare should review their coverage during the Open Enrollment period, October 15 through December 7. Even if you're happy with your current plan, there might be new options for 2024 that can improve your coverage or save you money.
5. Keep your marketable skills sharp.
Retirement may close one chapter of your career, but that doesn't mean you have to stop working. As longevity trends drive up the length of a typical retirement, many retirees could end up cycling in and out of the workforce to pad their nest eggs and to stay busy. Retirement can also be a fruitful time for aspiring entrepreneurs who finally have the time and resources to build their dream companies. Investing in yourself by taking online classes, attending industry conferences, and staying in touch with pros in your field can prepare you for that second or even third act.
6. Be flexible and open to change.
Very few seniors make a seamless transition into retirement. You might find that your new retirement schedule just doesn't fulfill you. Weekend hobbies like golf or crafting might get boring if your whole week revolves around them. As some old interests fade away, new interests might pop up. Give yourself the financial and personal flexibility to see where those new interests could lead you.
7. Review and adjust regularly.
Retirement planning is never a one-and-done process. Exciting new opportunities and difficult challenges will affect your retirement goals. Major life events like marriages, new grandchildren, and loved ones passing on will change your perspective on how you're spending your time and money and what kind of legacy you want to leave behind. Just as you should be prepared for change, your financial plan should be prepared to change with you.
Performing an annual review of your finances, your goals, and your life is an essential part of our comprehensive planning process here at Keen Wealth. Call our offices and schedule your annual review so that you can head into 2024 with a clear plan and some extra peace of mind.
Bill Keen is a financial advisor with nearly 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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