Are you gearing up to retire in 2024?
Retirement is an exciting time – you get to turn off that daily alarm clock and turn your attention to your goals, be that family, hobbies or other adventures. But the transition to retirement also involves a lot of moving parts, and even with all the excitement, it can feel overwhelming.
To help make sure you’re on track for a successful 2024 retirement, we’ve put together this guide, which covers everything from Social Security must-knows to tips for emotional wellbeing.
Retiring in 2024? Here’s What You Need to Know
Social Security
Social Security is a government program that provides financial support to eligible individuals and families in instances of retirement, disability or death, aiming to ensure a basic level of income for those who can no longer work or have lost a breadwinner.
Click here to download our free ebook “7 Social Security Secrets”
If you qualify, Social Security is a great addition to your post-retirement income plan – but it’s also an ever-changing program. If you’re planning to hang up your working hat in 2024, it’s important to know what your specific benefit could be and how that could affect your spouse or other family members. In some cases, it may even be beneficial to delay collecting your benefits!
- Get familiar with COLA
COLA stands for “cost-of-living adjustment.” It’s a part of the Social Security formula that decides how much of a benefit you’ll receive. But the COLA can change often – for example, it will bump up 3.2% in 2024, giving the average Social Security beneficiary about $59 more each month.
- Know your maximum benefit
The timing of when you start receiving Social Security benefits can significantly impact your overall retirement income. Other relevant factors include:
- The 35 highest-earning years of your career
- Your spouse’s (or even ex-spouse’s) benefits
- Age
- COLA
In general, the longer you wait until you begin collecting – up until age 70 – the larger your benefit will be.
The maximum benefit also changes each year, making it more difficult to pinpoint your number. However, the Social Security Administration (SSA) does offer an online portal where you can view any current or future benefits. You can access that Social Security Benefits Lookup portal here.
Related: Social Security: When Should You Start Collecting Benefits?
- Collaborate
Social Security planning can feel complicated, and your overall payout will depend greatly on when you decide to opt in. WIth that in mind, it’s a great idea to coordinate with your spouse to see how your benefits could overlap or impact one another.
You may also wish to reach out to a qualified financial planner who can give you personalized advice based on your goal of retiring in 2024.
Income and Expenses Planning
Now that you have an idea of what your Social Security benefit will likely be, it’s time to make a budget.
Keep in mind that once you retire, your expenses will probably change, too – you may travel to see family more or pick up new hobbies. And healthcare expenses are likely to increase during that time as you age and need more frequent trips to the doctor. These factors, along with inflation, mean that your retirement could have a higher price tag than you initially imagined.
Additionally, it’s important to keep a timeline perspective. While the average retirement lasts about 18 years for men and 21 years for women, you could potentially spend 30 or more years in retirement. Pacing your spending can help ensure you have enough funds to live off of during that time.
So, it’s crucial to list out and review both your expected income and expenses. Expenses could include:
- Mortgage and utility bills
- Food and travel
- Life insurance
- Healthcare costs
- Hobbies
- Car and gas money
When reviewing your potential income, consider:
- Savings
- Investments
- Retirement accounts
- Social Security and/or pensions
You have options as far as when and how much you’d like to take from your retirement accounts, so we recommend that you meet with an advisor to make a customized withdrawal plan to optimize your income.
Legal and Estate Planning
Whenever there’s a big change in your life, be that a death, marriage, career change or even retirement, you should look over your estate planning documents.
Whether you’ve already submitted your resignation or are still in the process of retiring, you should review these items:
- Will: A will outlines how you want your assets to be distributed after your death.
- Power of attorney: This designates someone to manage your financial affairs if you become unable to do so.
- Healthcare power of attorney: A healthcare POA authorizes someone to make healthcare decisions on your behalf if you are unable to do so. A healthcare directive is also useful in that it outlines how you’d like certain medical decisions to be made.
- Beneficiaries: Make sure to designate who you’d like to inherit any retirement accounts, life insurance policies or other assets.
- Business succession plans: If you own your own business, consider how you’d like the transition of ownership and management to occur in the event of disability or death.
Keep in mind that many of these documents require the guidance of an estate planning attorney, so you may need to reach out to yours in order to make necessary updates. If you don’t already work with an estate planner, reach out to your financial advisor for a recommendation.
Related: Estate Planning in Retirement: How to Plan for the Distribution of Your Assets After You Pass Away
Healthcare Options
One recent study found that the average American couple that retired in 2023 will pay about $315,000 for healthcare costs throughout the rest of their lives – yet most couples estimated that cost to be just $41,000. Furthermore, it’s reported that 70% of Americans over the age of 65 will need some form of long-term care in their golden years.
These numbers aren’t meant to scare you, but to prepare you for what could be very large expenses coming your way post-retirement.
As you transition out of work this year, it’s critical that you investigate long-term care options in your area, and even consider investing in long-term care insurance. There are several policies out there that can help ease those costs, although you should keep in mind that each policy has different premiums, coverages, exclusions and more.
Medicare is also a great way to offset healthcare costs in retirement. There are four main “Parts” to Medicare, each of which cover different healthcare-related costs like prescriptions, in-patient care or outpatient services. Most people qualify for Medicare benefits starting three months before they turn 65.
Related: Everything You Need to Know About Medicare’s 8-Minute Rule
While planning for poor health isn’t ever a fun activity, remember that having a plan for potential health-related challenges in advance can alleviate financial burdens on both you and your loved ones.
Emotional and Physical Wellbeing
Did you know that “one in three older adults reported infrequent contact (once a week or less) with people from outside their home in 2023?”
Retirement can create a very sudden change to your social life and daily routine, which can in turn affect both your emotional and physical wellbeing. That’s why it’s important to have a plan not only for your finances, but for your social life as well.
Think about clubs you could join, explore volunteer opportunities and intentionally work to stay connected with friends and family. As you explore new hobbies, consider adding in an activity that can help you to stay active.
Many retirees choose to pick up a part-time job after retiring, even if they don’t necessarily need the money. Part-time work can give you a routine schedule while also providing a continued sense of purpose and fulfillment.
Related: Health and Wellness in Retirement: How to Maintain Good Physical and Mental Health As You Age
Retiring is a milestone that deserves thoughtful preparation and planning. By addressing financial, lifestyle, legal and healthcare considerations, you can set the stage for a rich and fulfilling retirement in 2024.
Plan Your 2024 Retirement with PrairieView Wealth Partners
Whether you’re ready to transition into retirement or are still building up your savings, we can help you craft a plan toward your goals and achieve a two-comma life.
Click here to connect with a member of our team and get started today.
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