Retirement & Estate Planning Roundup: New in 2023
Need some talking points for retirement & estate planning?

It’s easier to start a conversation when you can bring new information to clients. Here are some developments in retirement planning, estate planning, and life insurance you can use to check in with clients and steer the conversation toward reviewing their options and overall insurance needs.

Here's what we'll cover:

Retirement Planning
Estate Planning
Life Insurance
Spotlight: Business Owners

Retirement Planning

The recent revisions to the SECURE Act (referred to as SECURE 2.0) are designed to help people sock away more money in their tax-deferred retirement accounts. If you have clients who are hovering near a higher tax bracket, it may be a good idea to contribute just enough additional money to keep them in their current (lower) tax bracket.

If you read our blog or newsletter regularly, however, you know that Van Mueller has a different idea on how best to help your clients deal with their tax burden. Traditional retirement accounts like a 401(k) or IRA are designed to let you save and earn without paying taxes yet. Instead, you pay them later when you begin taking distributions. However, as Van Mueller points out, is it likely that the tax rate will be higher now or higher later? If you believe the tax rate will be higher later, you may not be doing yourself any favors by creating a large (taxable) pile of money in your retirement account.

As you talk about your clients’ goals for retirement, ask them how they feel about paying taxes now versus paying taxes later. Their opinion can help you guide them toward a strategy that aligns with their goals and preferences.

Here are a few talking points you can use to reach out to clients and start a conversation about retirement planning:

  • 48% of Americans surveyed think “retirement” means “Social Security income.” That’s according to a 2022 survey by State Street Global Advisors. Only 32% of people surveyed understood that retirement income refers to a complete financial plan that can be implemented with a financial advisor.
  • New required RMD age. As of January 1, 2023, the new age for required RMDs with a tax-deferred retirement account is 73. Your clients can opt to delay their RMDs until April 1 of the year following the year they turn 73. This will rise to age 75 in 2033. Keep in mind this new rule only applies to clients who will turn 72 in 2023 or afterward.
  • Lower penalties for failing to take RMDs. The new penalty for failing to take RMDs by the required age? 25% of the amount withdrawn. That’s down quite a bit from the previous penalty of 50%. Clients can knock that penalty down to 10% if they realize their mistake, fill out a form to notify the IRS, and ask to correct it.
  • Increased catch-up contributions. The 2023 cap on IRA contributions is $6,500, but people 50 and over can contribute an extra $1,000 per year ($7,500 total). Catch-up contributions for 401(k)s are also capped at $7,500 for 2023. However, the 401(k) limit will go up to $11,250 with inflation adjustments for people age 60-63 starting in 2025.
  • More money for QLACs. Qualified longevity annuity contracts (QLACs) can be purchased with money from a qualified retirement account. Your clients can now use up to $200,000 of their qualified retirement funds for this purpose.
  • Small emergency withdrawals permitted. It’s now possible to withdraw up to $1,000 from a pre-tax retirement account without paying a penalty. Previously, any withdrawal before age 59.5 generated a penalty.
  • Sources: Mass Mutual, US Bank, Investor's Business Daily and WealthCounsel

Estate Planning

  • Increased estate tax exclusion. The new limit is $12,920,000 ($25,840,000 for a married couple). This limit is scheduled to expire on January 1, 2026. If Congress allows this new limit to expire, it will drop sharply to $5,000,000. If you have high-net-worth clients, it’s worth talking to them about balancing their need for retirement savings with maximizing this current exclusion to reduce the potential for estate tax.
  • Increased yearly gift tax exclusion. Your client can now give $17,000 per recipient per year ($34,000 for a married couple) with zero gift tax liability.
  • Source: CNBC and JD Supra

Life Insurance

  • Increased online quoting. 41% of life insurance shoppers surveyed by TransUnion got a quote online. However, only 6% of shoppers were able to buy their policies online (as opposed to 65% of personal lines shoppers).
  • Better value proposition needed. 34% of consumers surveyed by TransUnion did not have life insurance. Why not? They didn’t think they needed it.
  • Life sales down in 2022. Life sales were flat or down for all months of 2022 (compared to record-breaking sales in 2020 and 2021). That’s not necessarily surprising – sales can’t keep breaking records year on year. As the fear generated by the pandemic subsides and families deal with inflation, there’s less money to spend on what many perceive as a luxury rather than a necessity.
  • Key demographic to target. One bright spot? Seniors age 71 and up are still buying life insurance. All other age groups showed a decline in purchases for 2022, ranging from 4.2% to 6.3%. But the senior group’s sales activity ended 2022 up 2.1%. If you’re looking for an active market, there you go. This age group tends to buy policies with face amounts up to $250,000 – higher face amounts saw less activity in 2022 than previous years.
  • Policy stats. What types of policies are people buying? While all types were down, whole life took the steepest plunge at -12.7%. Term dropped 4%, while universal dropped 3.9%.
  • Sources: TransUnion, and

Spotlight: Business Owners

The fourth annual Retirement Readiness Survey from TD Wealth® provides insight into how we can help business owners with today’s most pressing challenges.

  • The top concerns of business owners surveyed:
    • 95% are worried about achieving their financial goals.
    • 63% say inflation worries them most.
    • 56% say general economic uncertainty is their biggest worry.
  • Inflation is still an issue. 54% of business owners say their businesses have been hurt by inflation and supply chain issues.
  • Big changes ahead. 31% of those business owners are looking into options like selling their business or moving their business to fight rising costs.
  • 65% say they’ve changed their retirement plan in the past 12 months. That’s thanks to all the issues mentioned above. Of those, 30% have postponed retirement.
  • 82% of business owners say they work with a financial advisor. Of those, 96% are happy with their advisor. This is a great stat to share with someone in that 18% of business owners who don’t have an advisor yet! Do they really want to miss out on a valuable resource? Owners with an advisor reported more confidence in their retirement goals, and 43% of those owners have turned to their advisor more frequently in the past year.

That’s our quick retirement & estate planning roundup!

What trends have you noticed in retirement planning lately? Share what clients have been thinking about in the comments below!