Four Smart Money Moves for 2024 Retirement Planning

Move #1: Take your workplace retirement plan contributions to the max

For 2024, the IRS has announced a $500 increase in the contribution limits for 403(b)s and 401(k)s up to $23,000.* Contributing as close to this maximum as possible is a great way to stay or get on track for your retirement goals. And while your financial circumstances may mean hitting the max isn’t realistic, increasing your contribution with an eye on getting to there eventually is a good strategy. Given the power of compounding returns—and the fact that many employers offer matching contributions—every dollar you contribute now could mean many more in retirement.

Understanding the power of compounding & your retirement investments

Compounding refers to the growth you have received on your original contributions plus the growth earned on the previous investment performance. Take the following example:

If you invested $100 and it grows 10% in one year you now have $110.

If it grows 10% the next year you now have $121.

But your total account hasn’t grown 10% over these two years…it has grown 10.5%. And, if your balance grows 10% each year – after 10 years you’ll have $259, meaning your average return was 15.9%. That’s the power of compounding growth!

If you do this exercise with a significantly larger amount of money over a much longer time period, you can see the positive impact it will have on your account balance.

If you have questions about maximizing your contributions or how compounding growth works, let’s talk—we’re here to help.

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Move #2: Name/update your beneficiaries

The move that may give you the highest benefit for the least effort is making sure the beneficiary information on your account is current. If no beneficiary is named for your retirement plan, the money will usually have to go through probate court before it’s distributed to your heirs according to your will (or your state laws if you have no will). The fastest and most efficient way of ensuring the people you love immediately get access to the money you want them to have is to name them as your beneficiaries.

The process to add/update your beneficiaries is quick and easy with TIAA. Simply log into your accountOpens in a new window, click on My Profile, review your designated beneficiaries and update as needed. With a little basic information about your beneficiaries, you can finish the entire process in less than three minutes. Your loved ones will thank you.

Information you need to update your beneficiaries

Move #3: For those beginning their careers, get the most out of your contributions

Too often younger and less tenured workers put off making meaningful contributions to their retirement plans. If you are in this situation, make 2024 the year you get more out of your retirement journey. While younger workers are often pessimisticOpens in a new window about their odds of achieving a secure retirement, don’t turn your current concerns into your future reality. Let the power of compound growth and time work in your favor.

Plus, you don’t need to be an investing expert to open and participate in your workplace retirement plan. Many plans have default investment options that cater to beginning investors. TIAA Wealth Management Advisor Melissa Shaw says: "Younger workers can choose one of the simpler options, start saving now, and start the compounding effect early and then look to refine their approach over time."

And if your plan offers matching contributions, be sure to try to contribute up to that amount—otherwise you are leaving money on the table!

"Younger workers can choose one of the simpler options, start saving now, and start the compounding effect early and then look to refine their approach over time."

Move #4: For those closer to retirement, have your plan in place and take your RMDs

If you are well-established in your career, have your 2024 retirement planning focus be on preparing for some of the realities of retirement. This can mean planning for things like healthcare costs in retirement, setting up plans for financial caregivingOpens in a new window, creating living wills with your family and much more.

Also, if you are 73 or older, be sure to take any Required Minimum Distributions (RMDs) from your tax-advantaged retirement accounts. While you aren’t required to take distribution from your workplace plan while you are still working, you may still need to take them from any non-workplace accounts you have. Remember: if you neglect to take these required distributions, you will be subject up to a 25% penalty (10% if you correct the mistake within two years) in addition to the regular income taxes you owe on these withdrawals. That’s a financial mistake you don’t want to make!

Take RMDs for IRA, 401(k), profit sharing, 403(b), other DC plans on April 1 following the year in which you reach 73.

Bonus Move: Schedule an advice session

Did you know that all TIAA plan participants have access to individual sessions with our team of financial consultants? These sessions can help you become better prepared for retirement, learn about investment strategies, review your current investment allocation mix and determine if you are on track to meet your retirement goals. No matter where you are in your career journey, starting the new year off with by meeting with us may be the best financial move you make all year!

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*Those 50+ can contribute an additional $7,500.

The above illustration is intended to show a hypothetical example of the principle of compounding. The example does not include the impact of any investment fees, expenses or taxes that would be associated with an actual investment. If such costs had been taken into account, the results shown would have been different. It also does not factor in market volatility.

This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.