8 Retirement Planning Priorities for the Rest of 2023

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8 Retirement Planning Priorities for the Rest of 2023

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Retirement Planning > Saving for Retirement

8 Retirement Planning Priorities for the Rest of 2023

By Roger Wohlner

Slideshow September 12, 2023 at 12:20 PM Share & Print

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As we approach the last quarter of 2023, there are a number of retirement planning issues you will want to cover with clients. The priorities will vary from client to client depending upon their situation, whether they’re in the middle or their careers, approaching retirement or are in partial or full retirement. Regardless of what life stage your client is in, there are retirement planning issues to consider.

Check out the gallery for eight client retirement planning priorities for the rest of 2023.

Roger Wohlner

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8 Retirement Planning Priorities for the Rest of 2023

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1. Retirement Timing
For clients who have not yet retired, determining the timing of their expected retirement is a key element in the planning process. For younger clients with 15 to 20 years or more to go, this often will be a somewhat loose date. For clients closing in on retirement, this date should be more defined.

The key here is to help you and your client formulate a plan to allow your client to retire on their timetable and terms, and then have a sufficient nest egg to last through their retirement years. This can be a fluid destination for clients far away from retirement and might also be a bit fluid for clients later in their careers. An increasing number of people are entering partial retirements, including those who launch a second career in retirement and the trend towards “unretiring” for many baby boomers.

While the timing or circumstances may change periodically, it's important to revisit this number with clients periodically to ensure that everyone is on the same page planning wise.

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2. Managing Retirement Accounts
Ensuring that your clients are properly investing inside of their retirement accounts is crucial for clients at all stages of their lives. Younger clients should be fully contributing to their 401(k)s and other accounts to the extent possible and these accounts should be invested for growth given their time horizon until retirement.

As clients approach retirement, it is still critical that they continue to fully fund these accounts as many of them are now in their prime earning years.

Even for retired or semi-retired clients, how their retirement accounts are invested is key for both growth purposes and to be sure the investment strategy is properly aligned with their retirement withdrawal strategy.

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3. RMD Planning
For clients who have not yet reached the age where required minimum distributions must commence, there are a few ways to reduce the effects of future RMDs. One option is to consider Roth conversions in the years leading up to the onset of RMDs. If it makes sense from a current year tax perspective, you might have your client start on a series of Roth conversions each year. This not only serves to reduce the amount of future RMDs but can offer flexibility in retirement income planning and in their estate planning efforts for certain non-spousal beneficiaries.

For clients turning 73 this year or who have inherited an IRA since 2020, there are a few special considerations for RMDs in 2023.

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4. QLACs
Another option to consider is the purchase of a qualified longevity annuity contract inside of their 401(k) or an IRA. The QLAC is a deferred annuity where the annuitization can be delayed until age 85. As far as RMDs are concerned, the money used to purchase a QLAC does not count against the balance for RMDs until the QLAC is annuitized. Additionally, the QLAC serves as a way to defer some of your client’s retirement savings until later in retirement to help make sure they don’t outlive their money in retirement.

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5. QCDs
Another option for RMD planning is using a qualified charitable distribution. Beginning at age 70.5, QCDs of up to $100,000, which will be indexed for inflation after the 2023 tax year as part of the Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act, can be made to qualified charitable organizations. This money comes out of the IRA tax-free, though there are no charitable deductions.

A QCD can be a very tax-efficient way to make charitable contributions. In addition, a QCD can be used to cover some or all of your client’s RMDs in a given year, reducing or eliminating the taxes on these distributions. QCDs made prior to age 73 serve to reduce future RMDs, as do any QCDs made in excess of the RMD amount in a given year for clients who must take RMDs.

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6. Tax Planning
Retirement planning and tax planning are almost synonymous, or should be. As you look at your client’s retirement income planning for the rest of this year and into next year, it's important to incorporate tax planning into your client’s withdrawal plans. If your client is tapping into their retirement savings, which “bucket” they withdraw from should be evaluated each year to ensure that they are making withdrawals in the most tax-efficient way. This is important if they are drawing Social Security benefits to reduce the amount of taxes on their benefits.

For younger clients, determining whether to contribute to an employer-sponsored retirement plan like a 401(k), or a designated Roth account, will be driven by a combination of current-year tax planning and looking at their potential tax situation in retirement.

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7. Social Security: When to Claim
When to claim Social Security is always a question for clients in their 60s. While they can maximize their benefit by waiting until age 70 to claim, there may be other factors to consider such as their health or family longevity history.

For clients who are married, the discussion can get a bit more complex. If one client’s benefit is significantly higher, it often behooves that client to wait until as late as age 70 to ensure that the lesser earning spouse receives the highest possible survivor’s benefit if applicable.

For clients who are eligible for survivor’s benefits, there are a number of considerations. For example, if they will receive a substantial benefit based on their own earnings record, it may be best for them to claim a survivor’s benefit based on their deceased spouse’s earnings record as early as possible and switch to their own benefit as late as age 70.

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8. Medicare Planning
Health care is often one of the largest expenses for many retirees. For clients who will soon be eligible for Medicare, there are a number of choices to be made. One is whether to go with original Medicare Parts A and B or to look at Medicare Advantage plans that also include drug coverage. This choice will also affect their potential eligibility for Medigap coverage down the road should they need to change from an Advantage plan.

For clients already on Medicare, you will want to take a look at their current coverage to see whether any adjustments need to be made during the upcoming annual Medicare open enrollment period that runs from Oct. 15 to Dec. 7 each year. Changes might be needed if there have been changes in the client’s health situation or their medication, the client is moving to another area, changes in the household or a number of other reasons.

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