As 2024 winds down and Americans prepare to celebrate the Thanksgiving holiday, U.S. and international stocks show healthy gains, giving retirement investors reason to cheer.
In addition, saving has gotten easier in several ways due to new laws regarding tax treatment.
Here’s a look at some items that retirement investors can be thankful for this year.
[READ: Your Guide to Retirement Planning.]
Strong Stock-Market Returns
As of mid-November, the S&P 500 is up about 26%. Global stocks, as tracked by the FTSE All-World ex US Index, are up more than 7%.
“The current markets have provided excellent returns for investors, allowing them to prepare their portfolios for the next downturn,” said Lawrence Sprung, a certified financial planner at Mitlin Financial in Hauppauge, New York, in an email.
“It has also provided them with the ability to review their financial goals and evaluate what brings them the most joy so they can align their financial plan accordingly,” he added.
Tamer Inflation
Inflation has been a headwind for the last few years, and to see it backing off significantly has been helpful from an investment standpoint, Sprung said.
It’s helped investor cash flow as well, he added.
“This decline has led to lower interest rates, which will certainly be welcomed by most, especially those who may have outstanding debt or looking to make a large purchase and perhaps have been holding off,” Sprung said.
A thankful mindset can help investors appreciate this year’s positive developments in market performance and lower inflation, said Andy Esser, a financial advisor at Edward Jones in Durham, North Carolina, in an email.
“For example, 2024 showed us promising signs of stabilizing economic fundamentals, tamer inflation and potential for continued economic resilience,” he said. “That should spell good things for anyone looking to safeguard their family’s financial well-being.”
Deductible IRA Contributions
Savers with retirement in their sights can be thankful for the tax advantages of individual retirement accounts.
The contribution limit for IRAs for tax year 2024 is $7,000, with an additional $1,000 allowed for savers age 50 and older. Those limits remain the same in 2025.
The amount an investor contributes to a traditional IRA is tax-deductible.
“I’m thankful for deductible IRA contributions,” said André Small, a CFP at A Small Investment in Humble, Texas, in an email.
Investors who don’t participate in a workplace retirement plan such as a 401(k) or 403(b) can deduct their IRA contributions, lowering their yearly tax burden.
“Contributing up to the annual limit can help maximize retirement savings while enjoying immediate tax benefits,” Small said, noting that even taxpayers taking the standard deduction can benefit.
“This dual advantage boosts savings and cuts taxes, making the traditional IRA a valuable tool for long-term financial planning,” he said.
[Related:How to Save in a 401(k) and IRA in the Same Year]
401(k) Portability
Earlier this year, the U.S. Department of Labor proposed regulation on automatic portability of 401(k) accounts. The goal is to help workers keep track of retirement savings accounts and reduce cash-outs when they change jobs.
“Major record keepers like Fidelity and Vanguard have been implementing this technology to address a significant issue,” said Said Israilov, CFP and wealth advisor at Israilov Financial in San Francisco, in an email.
“Roughly $92 billion in retirement savings exits the system each year when workers cash out small accounts during job changes, often incurring taxes and penalties,” he added.
Portability is especially valuable for workers who change jobs frequently or have smaller account balances, typically under $5,000, as these groups have historically had the highest cash-out rates.
By keeping retirement money invested over the long term, auto-portability helps preserve savings that might otherwise be lost.
In 2025, more employers are expected to adopt this feature in their retirement plans, making it easier for workers to maintain and grow their retirement savings as they change jobs, Israilov said.
Changes to 529 College Savings Plans
The SECURE 2.0 Act brought several changes benefiting retirement savers and those who fund education accounts for children and grandchildren.
“While 529 plans have always been useful as a tax-advantaged way to save for college, SECURE Act 2.0 now unleashes those accounts for even more possibilities, such as funding vocational school, managing student loan balances and even funding a person’s retirement with a 529-to-Roth IRA rollover,” said Esser.
“It has been refreshing to talk with clients about how this year’s SECURE Act changes can dispel the worry that they might overfund an account that won’t be used,” he added.
[READ: What Do Lower Interest Rates Mean for Retirees?]
Treaties Preventing Double Taxation
While not all tax laws apply to every investor, more targeted ones can help specific groups.
For example, the U.S. has tax treaties with several foreign countries to prevent double taxation.
With a growing number of Americans moving overseas to retire or even continue working, these tax treaties could result in big savings.
Jane Mepham, a CFP and principal advisor at Elgon Financial Advisors in Austin, Texas, works with foreign-born families and U.S. expats.
“Under an income tax treaty, a foreign resident is taxed at a lower rate or not taxed on certain kinds of income,” Mepham said in an email. “The idea is to ensure the person does not pay taxes twice on the same income.”
She cited an example of a person who moves to Canada on a U.S. student visa in 2024.
“He invests in a brokerage account. If he is in the country for less than 183 days, he will not be taxed on any capital gains from that brokerage account,” she said. “If he is in the country for more than 183 days, he would be taxed at 30%, but because there is a tax treaty between Canada and the U.S., he’ll be taxed at 15%.”
Higher Estate and Gift Tax Exemptions
Investors with an eye on their estate plans got some good news in 2024.
“For my high-net-worth clients, I am thankful they have the ability for higher estate and gift tax lifetime exemption for 2024,” Small said.
This year, the federal estate, gift and generation-skipping transfer tax exemption increased to $13.61 million per person, up from $12.92 million in 2023. That’s a total of up to $27.22 million for a married couple.
The annual gift tax exclusion, which is the amount a person may gift to any one recipient, increased from $17,000 to $18,000 this year. A married couple can gift $36,000 to a recipient.
As the current law sunsets, those amounts are set to decrease in 2026. However, it is possible that this could change with a second Trump administration.
To get the most out of the current exemption, Small advised investors to consider accelerating gifting strategies now.
“Options like irrevocable trusts, estate-freezing techniques or even cash gifts to heirs can help shift assets out of your estate before the exemption decreases,” he said.
“Lock in tax advantages while preserving wealth for future generations, charities or philanthropic causes,” Small added.
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7 Things Retirees Can Be Thankful for This Year originally appeared on usnews.com
