Every Month Counts: 2024 Retirement Planning Made Simple

As a fee-only fiduciary financial advisor in Hartford, CT, taking a more defensive approach to retirement planning is important, especially when the securities markets are extremely unpredictable. Based on that, we have developed a 2024 retirement planning calendar that lists the many unknowns that could impact your retirement plans next year: persistent inflation, rising interest rates, a 2024 Presidential election, and continued market volatility.

Regardless of what happens in the economy or stock market in 2024, your retirement plan should be ready for market conditions. 

Our calendar includes proactive tactics to manage your retirement assets throughout the year. We’ll include strategies focused on investment management, estate planning, and maximizing your social security benefits.  

Let’s get started.

January:

Reviewing and rebalancing your investment portfolio is important as the market ebbs and flows. Market movement can cause portfolios to get out of balance (stocks versus bonds), increasing your risk.

Start the new year by reviewing your portfolio and then setting regular reviews with your financial advisor to ensure you maintain a balance that optimizes your returns and manages your risk at the same time. 

February:

If you are nearing retirement, you want to maximize your contributions to retirement accounts like 401(k)s or IRAs. The 2024 401(k), 403(b), 457, and Thrift Saving Plan contribution limit is $23,000. If you are over 50, you can contribute an additional $7,500. 

You can contribute $7,000 in 2024 if you have a traditional IRA.  

Maximizing your contributions builds your retirement assets and reduces your taxable income at the same time. It is even more important if your employer provides a matching contribution to your 401(k) plan. This is an automatic return on your contribution.

March:

No one wants to pay the government more taxes than necessary, especially after you are retired. It is a form of erosion that reduces the amount of assets you have available for future use.  

You should use an asset location strategy focusing on placing your investments in various account types (tax-free, tax-deferred, taxable) that optimize your after-tax returns. For instance, placing growth investments in Roth IRAs can be advantageous because they grow tax-free, and all future withdrawals are tax-free. 

Holding income-generating assets like bonds in tax-deferred accounts (traditional IRAs or 401(k)s) also produces tax-free growth but taxable distributions.  The correct asset location by account type can significantly impact your long-term financial results, impacting your retirement income.

Download our eBook, “How to Plan a Bullet-Proof Retirement.”

April: 

April is an ideal time to identify tax-saving strategies for the upcoming financial year. This could involve adjusting withholdings, exploring tax-advantaged investments, or planning for deductions and credits for which you may be eligible in the next year.

May: 

Another important part of a retirement plan is ensuring an adequate emergency fund to handle unexpected expenses. Your goal is financial stability, so you do not have to compromise your retirement savings. 

Consider creating an emergency fund that covers at least six months of living expenses. This can vary based on job stability, lifestyle, physical health, and financial obligations. 

Regularly review and adjust your emergency fund to align with changes in your family’s financial circumstances.

June: 

Conduct a mid-year financial review. Review your year-to-date financial progress towards your retirement goals and adjust your savings plan.

July: 

Explore potential investment opportunities by researching various economic sectors with significant growth potential. An example is the technology sector, which is experiencing growth due to AI and other innovations. Healthcare, driven by aging populations (76 million baby boomers) and advancements in medical technology, can also provide some exceptional investment opportunities. 

If we experience a recession in 2024, consider investing in economic sectors less susceptible to market volatility (utilities, consumer staples, healthcare). 

Diversification across these sectors can help manage risk while capitalizing on potential growth opportunities.

August: 

Review your insurance coverage, including health, life, disability, and, if appropriate, long-term care insurance, to ensure it manages all of the risks that could undermine a comfortable, secure retirement. 

September: 

Year-end tax strategies can significantly impact your financial results. One effective approach is tax-loss harvesting, where you sell investments at a loss to offset sales of assets with capital gains. For example, if you gained $5,000 in one stock but lost $2,000 in another, you can reduce your taxable capital gains to $3,000. 

Another strategy is making charitable donations. Contributing to a charity can lower your taxable income. These strategies require careful consideration of your financial situation to maximize the benefits.

October: 

October is National Financial Planning Month, a time dedicated to emphasizing the importance of financial planning. This month serves as a reminder to start planning for 2024. 

It’s an ideal time to review and adjust your financial strategy, ensuring it aligns with your short-term and long-term objectives. You also have plenty of time to enact the plans before the end of the year. 

Whether saving for retirement, managing debts, or investing wisely, this month encourages a proactive approach toward financial health and literacy, building a strong foundation for the year ahead. 

November: 

You should review your estate plan annually to ensure your financial legacy will be managed as you want. Regularly examining your wills, trusts, directives, and other legal documents is essential for aligning them with your current situation and future expectations. 

Life events such as job changes, the birth of children, or the acquisition of significant assets can necessitate updates to plans and documents. Keeping beneficiary designations current avoids future legal complications and ensures assets are distributed according to your wishes. 

December: 

Reflecting on the current year’s financial progress is crucial for understanding how your financial journey has progressed over the past year. This month offers a valuable opportunity to evaluate your successes and challenges, providing insights into your spending, saving, and investment strategy.

It’s also an ideal time to set new financial resolutions for the upcoming year. 

Establishing clear, achievable goals, whether increasing your savings, reducing debt, or investing wisely, can help guide your financial decisions in the new year. This period of reflection and planning creates a strong foundation for continued financial growth and stability.

About Heritage Capital

“Your retirement strategy should focus as much attention on protecting your assets as it does on making them grow.” – Paul Schatz

Spending 30 years or more in retirement is increasingly common, so long-term planning is highly recommended. Following are a few frequent questions we hear from current clients:

• Are you concerned about outliving your savings?
• Do your current investments match your risk tolerance?
• Will you have enough retirement income to maintain your current lifestyle?
• How can you generate more income during periods of low interest rates?

At Heritage Capital, our priority is securing our client’s financial futures. This demands a balanced investing approach, incorporating risk management and growth strategies.

Many investors, including professional advisors, focus solely on aggressive growth tactics. But, you know, the securities markets fluctuate in value, including significant downturns. A strategy focused only on growth is risky and can lead to significant financial losses.

We advocate a different approach. Rather than merely riding the market’s ups and downs, we engage in Active Investment Management.

In your 30s or 40s, a financial setback might not be a major concern—you have plenty of time to recover your losses. But as you age, your recovery time shrinks, and it pays to be more conservative.

The good news is it’s possible to manage these risks. Balancing defensive strategies with growth opportunities can reduce your risk of large losses and steadily progress toward pursuing your financial goals.

For over 31 years, we have helped guide our clients down a path that balances the impact of financial risk and reward. Connect with us.