10 retirement concerns that will shape 2024

December 26, 2023 5:30 AM

Hands fanning out one hundred dollar bills

Retirement may seem like a complex undertaking, yet employers have remained committed to helping their workers reach their financial goals — with a little help.

This year, Employee Benefit News explored the state of retirement and employees' financial readiness, with stories covering SECURE 2.0 and the return of pensions, to generational and gender differences in savings habits and more. Experts across industries shared their advice — and a few warnings — to get, and stay on the right track for the future.

At the end of the day, it comes down to this one question: Can I afford to stop working someday? With the right planning and support, the answer is yes. Below, revisit our top stories about retirement to find solutions to your most pressing questions and concerns.

Will my Medicare premiums go up in 2024?

As 2023 comes to an end, seniors across the country are finding out what their premiums will be for Medicare Part D, the part that covers prescription drugs, in 2024. And many have learned their bills will be much higher next year. According to a new research report by HealthView Services, in California, Florida, New York, Pennsylvania and Texas, seniors enrolled in Part D plans from three of the largest Medicare providers will see their premiums jump, on average, by 42% to 57%.

The Inflation Reduction Act failed to stop the jump in Part D premiums, and may actually be causing it: In particular, the law sets a $2,000 cap on how much Medicare recipients spend out of pocket on drugs per year. For seniors with the biggest medical bills — for example, those dependent on expensive cancer drugs — the money to cover the rest of those bills must come from somewhere, and insurers appear to be getting it from the seniors themselves. Will you be affected by this increase?

Are pensions the next big retirement benefit?

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What the end of IBM's 401(k) match could mean for the future of retirement plans

Beginning in 2024, IBM will no longer match employee contributions to their 401(k) plans. The news broke in early November, and reactions to the end of the match — which will be replaced by a 5% retirement benefit — have been mixed, sparking conversations about what the move could mean for the future of retirement plans.

"If what you're looking for from retirement is lifetime income, you can get it on a better basis from this new retirement benefits account, or cash balance plan, than you can from the 401(k) plan because there's no intervening party or middle man," says John Lowell, partner at October Three Consulting, a benefits and retirement advisory that champions the combination of 401(k) offerings along with cash-balance pensions. He lays out what's in store for IBM employees — and what it means for the larger workforce.

Where should I live in retirement?

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Best cities to retire in 2024

U.S. News and World Report's latest ranking of the best cities for retirees listed seven cities in Pennsylvania in their top 10 list. Factors like housing affordability, quality and accessibility of healthcare, and overall happiness influenced where retirees feel the best about their post-work lifestyle.

Locations were given a score out of 10 — Harrisburg, Pennsylvania took the top spot with an overall score of 7.1. The median home price in this area is $223,842, compared to the national average of $416,100. New York City, despite its exorbitant housing prices, also made it into the top 10, due to high quality of healthcare and overall happiness of retired residents. See which other cities made this year's list.

Are millennials beating boomers in the savings race?

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Millennials are on track for better retirement than boomers, Vanguard study finds

Much has been written about the wealth gap between baby boomers and millennials, with the younger generation on the losing end. But in the long run, millennials may retire in more comfort than their elders. That's according to a study from Vanguard, which found that for the most part, Americans born in the 1980s and early '90s "enjoy a brighter retirement outlook than boomers."

The study measured this readiness in terms of how much of their pre-retirement income these Americans will be able to "sustainably" replicate after they leave the workforce, using their retirement plans, Social Security and other resources. By that measure, Vanguard found that median-income "early millennials" — defined as those currently aged 37 to 41 — are on track to replace 58% of their pre-retirement earnings, while median-income "late boomers" — defined as those aged 61 to 65 — will only be able to regenerate 50%. Here's how all generations can best prepare themselves for retirement.

Can I finally pursue my passion after leaving the workforce?

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From rock star to golf reporter, the side gigs bringing retirees back to work

Making the switch from employee to retiree can be challenging, both financially and mentally. Increasingly, older Americans are turning to side gigs to keep a little money coming in and their interests peaked. Fifty-seven percent of employees plan to work either full- or part-time into retirement age, according to the Transamerica Center for Retirement Studies. A survey from Bankrate found that 21% of baby boomers aged 58-76 work a side gig, making around $500 per month.

For Colleen Gilbert, 70, a lifelong fascination with genealogy has led to a post-career side gig of tracing family trees and writing genealogy reports for up to $500 apiece, since retiring from her previous job as a bookkeeper. Meanwhile, Donna Brown, 72, is a retired nurse who now plays in a rock band with her husband, after leaving those dreams behind decades ago. These retirees share why it's never too late to pursue your goals.

Will the Biden administration raise the retirement age?

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Why Democrats and Republicans are at odds over the retirement age

The conversation around raising the retirement age can seem like a financial lifeline — or a threat, depending on your political affiliations. In June, the Republican Study Committee released a plan to tackle ballooning national debt, with one suggestion to raise the full retirement age from 67 to 69. And prospective Republican presidential candidate Nikki Haley has backed such an increase, suggesting retirement age be tied to life expectancy.

Today, the full retirement age — when seniors are eligible to collect their full Social Security payments — is 67-years-old for those born in 1960 or later. People can start collecting partial payments at 62, and become eligible for Medicare at 65. While raising the retirement age has been a frequent debate in the past, the last major social security reform was in 1983, which gradually raised the retirement age from 65 to 67 by 2022. Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute, predicts any new changes would take just as long to implement. Here's why.

Is it ever too early to start saving for retirement?

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'25 is the new 55': How to jump-start employees' retirement savings early in their careers

According to research by HR and benefits consulting firm Buck, just 27% of employees feel confident they can cover their expenses in retirement, while 19% have no idea if they'll have enough saved. Buck found that almost 45% believe they need $1 million dollars in retirement — a lofty goal, considering the average retirement account balance is $65,000, according to the Federal Reserve.

"Twenty-five is the new 55 — that's when you need to start thinking about retirement and getting ready," says Tonya Manning, wealth practice leader and chief wealth actuary at Buck. "But what we really need to do is think about the total financial well-being and preparedness of your employees before you even start drilling in on whether they're saving enough." Manning shares how to ensure all employees are financially prepared for the future.

Will student loans ruin my financial future?

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Student debt thwarts Americans saving for retirement

For many Americans, student loans are not just a debt from the past. They're making it impossible to save for the future. According to a study by the Achieve Center for Consumer Insights, 30% of Americans with student loans have not saved for retirement because of their debt. This finding dovetails with other research: A Fidelity study found that 84% of borrowers said their student loans impacted their ability to save for retirement. And a report by Goldman Sachs found that "financial vortexes" — stressors including student loans, credit card debt and other expenses — can reduce American retirement savings by up to 37%.

"Any sort of life goal that has a financial component is being impacted by student loan debt," says Andrew Housser, co-founder of Achieve. "The cost of education continues to outpace inflation by a long shot. The whole system is set up to break badly at some point." Can anything be done to ease this financial burden?

Why do I have so much less savings than my male peers for the future?

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Why women can't afford to retire

Women are in a much more precarious financial state than their male counterparts when it comes to their retirement readiness. Women's median 401(k) account balances were 65% lower than for men in 2022, according to investment management firm T. Rowe Price. Women also contribute 43% less annually to their investment accounts, adding $5,421 per year, compared to $9,578 for men. As such, 62% of women expect to retire later than planned or not at all, according to research from Nationwide Insurance.

What's preventing women from saving for themselves? For starters, women begin their careers at an immediate disadvantage: Saddled with more student loan debt than their male peers, they also enter jobs making less annual income. Overtime, caregiving drives them away from career acceleration and often out of their profession altogether. By the time they've reached retirement age, the time to learn about finances has long since passed. But women can still prioritize their own financial well-being with the right tools and support.

Where should I start with my retirement savings?

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A starter guide to retirement: 5 steps toward a secure future

It's not easy to prepare for one's financial needs 40 years into the future, and yet a retirement plan is supposed to help workers do just that. But how can employees get into this mindset, especially as they're first starting out?

The first question workers should ask themselves is if their employer provides a retirement plan. Typically that would be in the form of a 401(k), or if the employer is a non-profit or educational institution, they are required to offer a 403(b). If an employee decides they are not getting enough bang for their buck with an employer-sponsored plan, they can get an IRA, which is mainly divided into types of plans: traditional and Roth. Two retirement experts walk through all the options.