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Planning for Retirement? Top 5 Experts Share Their Tips

Experts share recommendations, including "Rothifying" IRAs and navigating evolving tax laws, with a focus on strategic financial planning.
Cover Image Source: Elderly couple relaxing outdoors (representational image) | Photo by Gustavo Fring |Pexels
Cover Image Source: Elderly couple relaxing outdoors (representational image) | Photo by Gustavo Fring |Pexels

Tips from 5 retirement experts to safeguard your future

Image Source: Photo by Pixabay | Pexels
Pexels | Photo by Pixabay

The beginning of the year is always a time of excitement, signaling a fresh start and renewed motivation. However, for those planning retirement, it can also bring uncertainty, especially in 2024, with concerns about inflation, interest rates, and a presidential election. To navigate these complexities, it's crucial to rely on expert insights for well-informed decisions. Five top retirement planning experts have shared their strategies 2024 challenges, per Kiplinger. Here's what they recommend:

1. Consider ROTH Conversions 

Elderly couple relaxing outdoors (representational photo) | Pixabay

Financial adviser Katherine Brown suggests exploring the benefits of Roth IRAs, emphasizing tax-free withdrawals. For individuals aged 55 to 72, she recommends converting smaller amounts of traditional IRAs to Roth IRAs in lower tax brackets before required distributions and Social Security benefits kick in. This strategy is advantageous for those planning to leave an inheritance, allowing heirs to defer withdrawals and avoid hefty taxes. Brown also advises timely action, particularly regarding backdoor Roth IRA conversions, a strategy useful for high-income earners. She underscores the importance of converting after-tax money in traditional IRAs to Roth IRAs, especially before potential regulatory changes.

2. Rebalance your portfolio

Image Source: Photo by Kindel Media |Pexels
Fine-tuning your portfolio can yield significant benefits | Pexels |  Photo by Kindel Media

Portfolio manager Marc Lieberman emphasizes the importance of rebalancing investment portfolios. Despite sounding routine, fine-tuning your portfolio can yield significant benefits, especially after years of high market volatility. With fixed-income returns potentially turning positive, he warns investors to rebalance their portfolios, ensuring they are not underweight in this asset class. Lieberman also anticipates heightened market volatility in 2024 and suggests diversifying with gold and short-term treasuries. Gold can act as a stabilizer during turbulent times, and treasuries provide a safe harbor while waiting for more favorable market conditions.

3. Private debt for enhanced returns

Scamsters are building traps for elderly people as they are not much tech-savvy and can be easily victimized by polite behavior|Pexels
Representational photo | Pexels

Eric Hutchens, president and CIO at Allodium Investment Consultants, highlights private debt as a key retirement income idea for 2024. Private debt funds offer attractive yields with diversification benefits as they are less susceptible to market volatility compared to publicly traded stocks and bonds. Hutchens explains the variety within private debt funds, ranging from lower to higher risk profiles. While acknowledging a potential trade-off in liquidity, he emphasizes that the illiquidity premium can enhance returns over time for investors in this asset class.

4. Utilize higher rates 

Image Source: Photo by Karolina Grabowska |Pexels
Representational photo | Pexels | Photo by Karolina Grabowska

Financial adviser Melissa Walsh suggests taking advantage of today's attractive interest rates by considering Certificates of Deposit (CDs) and municipal bonds. FDIC-insured CDs currently offer yields between 4% and 4.75% for one to five-year maturities. Municipal bonds, especially beneficial for those anticipating a higher retirement income tax bracket, provide federal tax-exempt interest. Walsh introduces a "bucket approach" for managing investments and retirement income. In the first bucket, cover living expenses for the next 12 months and emergency reserves in conservative interest-paying investments. The second bucket addresses near-term cash needs (one to five years) with laddered CDs or high-quality bonds while the remaining portfolio is diversified based on risk tolerance.

5. Understand your tax situation and avoid reactionary moves 

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Representational image | Pexels | Photo by  Andrea Piacquadio

Robert Carroll, managing director at Carnegie Investment Counsel, advises caution in response to evolving tax laws. With the Tax Cuts and Jobs Act of 2017 expiring in 2025, he suggests understanding your current tax situation and avoiding reactionary moves based on speculative congressional actions. Carroll also highlights an opportunity for higher-income families, as some retirement plans now allow after-tax contributions and "in-plan" conversions to a Roth IRA. Remember, not every move is suitable for everyone; consult with a fee-only financial adviser to make adjustments aligned with your specific financial goals.