Group 1 - Rising healthcare costs are a significant concern for retirees, as they tend to increase at a faster rate than general inflation, necessitating careful financial planning for medical expenses [3][4] - Contributing to a health savings account (HSA) during working years can be beneficial, as funds can grow tax-free and be used for medical expenses in retirement [4] - Choosing Medicare coverage wisely each year is crucial, as health needs change and exploring different plans can lead to better coverage and cost savings [5] Group 2 - Taxes will impact retirees' income, and future tax rates are uncertain, making it important to consider saving in a Roth account for tax-free gains and withdrawals [6] - Municipal bonds are highlighted as a tax-friendly investment option for generating retirement income, as their interest is exempt from federal taxes and potentially state and local taxes [8]

Core Insights - Over 50% of current retirees did not account for taxes in their retirement planning, and nearly 60% wish they had prepared better for retirement taxes [2] Tax Considerations in Retirement - Taxes on retirement account withdrawals depend on the type of account; Roth account withdrawals are generally tax-free, while 401(k) and traditional IRA withdrawals are subject to income taxes [4] - Some states have exceptions for retirement income or do not tax income at all, so it is important to check state tax codes for potential exemptions [5] - Social Security benefits may also be subject to state and federal income taxes; 41 states do not tax these benefits, but federal taxes depend on provisional income thresholds [6][7] Planning for Retirement Taxes - Many retirees regret not planning for taxes on retirement income, highlighting the importance of understanding potential tax liabilities [8] - Proper planning can alleviate confusion regarding taxes, allowing retirees to enter retirement more prepared [9]

Core Points - New IRS rules will restrict catch-up contributions for high earners aged 50 and up, effective from 2027, with some plans potentially implementing changes as early as next year [1][2] - Workers earning over $145,000 in the previous year will only be able to make catch-up contributions to their 401(k) and other workplace plans using after-tax (Roth) dollars, eliminating the option for pretax contributions [1][4] Summary of New Rules - Catch-up contributions allow individuals aged 50 and above to contribute more to retirement accounts, with the standard 401(k) contribution limit set at $23,500 for 2025, plus an additional $7,500 for catch-up contributions [4] - Workers aged 60-63 can qualify for a temporary "super" catch-up contribution of $11,250 [4] - High earners will lose the tax deduction associated with pretax contributions, which lower taxable income in the contribution year, while Roth contributions do not provide current tax reductions but allow for tax-free growth and withdrawals in retirement [4][5] Implications for High Earners - High earners will be required to make all catch-up contributions into the Roth bucket, which may limit their tax strategy options [5] - For those earning less than $145,000, the choice between pretax and Roth contributions remains available [5] - Roth contributions can provide a diversified tax strategy in retirement, offering a mix of taxable and tax-free accounts, which could be beneficial if tax rates increase in the future [6]