5 ways retirement changed in 2024

December 13, 2024 10:19 AM

In 2024, life for American retirees changed in a number of ways — and is poised to change even more in 2025.

For retirement, 2024 was a year of one enormous change and many smaller, more gradual ones.

The big change, obviously, was the reelection of Donald Trump. Like almost everything else about him, Trump's impact on American retirement is hard to predict. As a candidate, he broke with Republicans by emphatically pledging to protect Social Security and Medicare. But as the leader of a party that has long tried to privatize both programs, some experts wonder whether he'll keep his promise.

Then there are the more incremental changes. Social Security continued to drift toward insolvency, although this year its depletion date was pushed back a year. At the same time, Medicare premiums continued to rise — faster, in fact, than the cost-of-living adjustment for Social Security.

On the individual level, Americans continued to adapt to a challenging economy. As full retirement remained financially out of reach for many, a growing number of seniors — a majority, according to one study — chose to only "partially" leave the workforce. Meanwhile, projections for the great wealth transfer — the inheritance expected from baby boomers to their heirs — have only grown, but few Americans have prepared for it.

All in all, it's been a complicated year — and 2025 is likely to be even more complicated. Before it begins, here's a look back at the biggest retirement news of 2024.

Trump wins reelection, raising questions for public benefits

On November 5, Trump won back the presidency after four years out of office — the first president to do so since Grover Cleveland. What will that mean for Social Security and for Medicare?

Some believe cutting Social Security benefits is off the table. That's something Trump has said he'll never do, and even if he attempted to do so, he would need congressional approval. But there are also other, more indirect ways Trump's leadership could affect Social Security. Even unrelated policies, including those on immigration, could reduce tax revenue for the program.

Similarly, Trump has repeatedly vowed to keep his hands off Medicare. What complicates that is the Inflation Reduction Act, a Biden-era law that takes aim at both climate change and health care costs for seniors. For Medicare recipients, the IRA sets a cap on out-of-pocket expenses, limits the price of insulin, makes vaccines free and — most significantly — allows Medicare itself to negotiate the prices of drugs.

Trump wants to repeal all that.

"My plan will terminate the Green New Deal, which I call the Green New Scam," he said in September. "We will rescind all unspent funds under the misnamed Inflation Reduction Act."

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Medicare premiums outpace Social Security

Medicare premiums shot up in 2024, and they're going to grow even faster in 2025. That's bad news for retirees — not only for their Medicare benefits, but also for Social Security.

Next year, Medicare Part B premiums will rise more than twice as fast as Social Security's cost-of-living adjustment (COLA). According to the Centers for Medicare & Medicaid Services, next year's COLA will be 2.5%. The standard Part B premium, meanwhile, will jump by 5.9%.

Why does that matter? Because Part B premiums are automatically deducted from Social Security checks.

"It does swallow up their COLA," said Mary Johnson, an independent Social Security and Medicare analyst. "And it causes anguish."

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Medicare premiums quickly outpace Social Security COLA

The rise of partial retirement

Even apart from retiree benefits, retirement itself is changing. Gone are the days when most Americans retired all at once after a final day at the office. Today, research shows, a majority of Americans leave the workforce little by little.

According to a 2024 study from JPMorgan, 53% of U.S. households drawing retirement income are only "partially" retired — meaning either they're still working some hours, or one spouse has retired and the other is still working.

"There may be a transition period where either an individual retires more gradually or one member of a couple retires before the other," said Sharon Carson, retirement insights strategist at JPMorgan and the author of the study. "Phasing into retirement could be a great opportunity — or it could be something that has to be done due to lack of financial preparedness."

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The end of the end? Most Americans only 'partially' retire, study shows

Social Security inches closer to insolvency

Another year gone, another year closer to Social Security's depletion — sort of. This year, the Social Security Administration announced that the program's trust fund is still heading toward insolvency, but slightly slower than before.

According to the SSA's latest report, by 2035 — one year later than projected last year — the trust funds for the Old-Age and Survivors Insurance and Disability Insurance programs are on course to become depleted, and will only be able to pay out 83% of scheduled benefits.

As it did last year, that insolvency date puts Social Security on a collision course with America's looming "gray tsunami." By 2030, according to the U.S. Census Bureau, all 73 million baby boomers will have reached retirement age, potentially putting enormous strain on the program.

For retirement advisors, all of this raises a question: Can their clients count on getting Social Security when they retire? Somewhat surprisingly, many advisors say the answer is yes.

"I tell my clients, even the youngest, to plan on it being there for them," said Larry Luxenberg, owner of Lexington Avenue Capital Management in New York City.

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Social Security is still in trouble. What should advisors tell their clients?

Ready or not, the great wealth transfer is coming

One thing that can change a person's retirement plans is a sudden, massive inheritance. That could be in the cards for millions of millennial and Gen Z Americans — but in many cases, neither they nor their parents are ready.

According to a 2024 study from Edward Jones, a significant gap remains between how many U.S. adults will pass down wealth to their descendants and how many have actually talked to those descendants about it. Almost half — 48% — plan to leave an inheritance, but only 27% have discussed it with their families.

These conversations have taken on new urgency because of the great wealth transfer, which is already underway. By 2045, the baby boomer generations and the silent generation are expected to leave $72.6 trillion to their heirs, researchers at Cerulli Associates have estimated.

Americans know they need to do more to get ready — on both sides of the will. According to Edward Jones' study, which surveyed 2,202 U.S. adults, only 23% feel prepared to pass down an inheritance, and only 25% of younger generations feel prepared to receive one.

"We really want to work with our clients and our advisors to close that gap," said Amy Theisen, the senior strategist at Edward Jones' estate and legacy research team. "We really see that conversation as something that maybe has been overlooked over the years — perhaps it was taboo — but something that really needs to come to the front of the line."

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Most Americans not at all ready for the great wealth transfer