Retirement Planning
Retirement Planning covers the full landscape of US retirement savings including 401(k), IRA, SEP, and SIMPLE accounts; required minimum distributions; Social Security claiming strategies; the 4% safe withdrawal rule; Medicare enrollment; pensions; and catch-up contributions. Learners gain the knowledge to make high-value retirement planning decisions at every career stage.
Who Should Take This
This course is ideal for working adults at any stage who want to understand the tax-advantaged account system, optimize Social Security timing, and build a realistic retirement income plan. It is especially valuable for those in their 30s-50s who are beginning to think seriously about retirement and want to move beyond basic 401(k) enrollment to active planning.
What's Included in AccelaStudy® AI
Adaptive Knowledge Graph
Practice Questions
Lesson Modules
Console Simulator Labs
Exam Tips & Strategy
13 Activity Formats
Course Outline
1401(k) Plans 10 topics
Describe how a traditional 401(k) reduces current taxable income by allowing pre-tax contributions up to $23,000 in 2024 (plus $7,500 catch-up at age 50+) with taxes deferred until withdrawal in retirement
Describe how a Roth 401(k) accepts after-tax contributions that grow tax-free with qualified withdrawals in retirement tax-free and explain why this option is typically advantageous for younger workers in lower tax brackets
Apply employer match maximization as the first retirement savings priority by calculating the free return from matching and comparing it to the after-tax cost of forgoing the match, demonstrating it almost always exceeds any other use of the funds
Describe vesting schedules (immediate, cliff, and graded) that govern when employer match contributions become owned by the employee and explain the financial risk of leaving a job before full vesting
Apply 401(k) rollover rules by identifying the mechanics of a direct trustee-to-trustee rollover to an IRA when changing jobs to preserve tax-deferred status, avoid the 20% mandatory withholding on indirect rollovers, and consolidate retirement assets
Analyze the trade-off between traditional and Roth 401(k) contributions for a mid-career earner in the 22% or 24% bracket by comparing the guaranteed tax reduction now against the likely tax bracket in retirement given expected savings rate and Social Security income
Describe the 401(k) early withdrawal rules including the 10% penalty plus ordinary income tax on distributions before age 59.5 and identify the penalty exceptions including separation from service at 55 or later (Rule of 55), substantially equal periodic payments (SEPP/72t), disability, and qualifying hardship distributions
Apply 401(k) investment selection best practices by identifying low-cost index fund options within the plan menu, avoiding company stock concentration above 5-10% of the portfolio, and selecting a target-date fund when no low-cost index options are available
Describe the 401(k) hardship withdrawal rules permitting in-service distributions for immediate and heavy financial need (medical expenses, tuition, primary residence purchase, foreclosure prevention, funeral expenses, casualty losses) at the cost of ordinary income tax and 10% penalty
Analyze the long-term cost of taking a 401(k) loan or hardship withdrawal versus borrowing from other sources by calculating the tax and penalty cost, the lost compounding on withdrawn funds, and the true total cost compared to alternatives such as a home equity loan or personal loan
2IRA Accounts 9 topics
Describe Traditional IRA mechanics including deductible contributions reducing AGI (subject to income limits when also covered by a workplace plan), tax-deferred growth, and ordinary income taxation on all withdrawals in retirement
Describe Roth IRA mechanics including after-tax contributions, tax-free growth, tax-free qualified withdrawals after age 59.5 (account open at least 5 years), no required minimum distributions, and contribution income phase-outs ($146,000-$161,000 single, $230,000-$240,000 MFJ in 2024)
Apply the IRA annual contribution limit of $7,000 (plus $1,000 catch-up at age 50+ in 2024) noting that the limit is shared across all IRAs owned and that contributions require earned income not exceeding the contribution amount
Apply the backdoor Roth IRA strategy for high-income earners above the Roth income phase-out by making a non-deductible Traditional IRA contribution and converting it to Roth, and identify the pro-rata rule complication when existing pre-tax IRA assets are present
Describe SEP IRA suitability for self-employed individuals allowing contributions up to 25% of net self-employment income or $69,000 in 2024 whichever is less, and SIMPLE IRA mechanics for small businesses with up to 100 employees including required employer contributions
Analyze the optimal IRA type for a self-employed individual with variable income by comparing SEP IRA (high limit, flexible contributions) versus Solo 401(k) (adds employee contribution component allowing higher total contributions at lower income levels) based on expected annual income
Describe IRA beneficiary designation rules including primary and contingent beneficiaries, the inherited IRA 10-year rule for non-spouse beneficiaries under the SECURE Act requiring full distribution within 10 years of the original owner's death, and the surviving spouse's option to treat the inherited IRA as their own
Apply the Roth IRA five-year rule by confirming that tax-free qualified distributions require both age 59.5 and the account being open at least 5 years since the first contribution and distinguishing the separate 5-year clock that applies to each Roth conversion for penalty-free principal withdrawal
Apply spousal IRA contribution rules allowing a non-working or low-earning spouse to contribute up to the standard IRA limit based on the working spouse's earned income and use this provision to maximize the household's annual tax-advantaged retirement savings when one spouse takes a career break
3Required Minimum Distributions 5 topics
Describe RMD rules requiring withdrawals from traditional IRA, SEP IRA, SIMPLE IRA, and 401(k) accounts beginning at age 73 (under SECURE 2.0 for those born 1951-1959) or age 75 (born 1960+) and explain the 25% excise tax penalty on missed distributions
Apply the RMD calculation by dividing the prior December 31 account balance by the life expectancy factor from the IRS Uniform Lifetime Table and explain how multiple IRA accounts can have their RMDs aggregated and withdrawn from any one account
Analyze the impact of large RMDs on retirement tax planning including how pre-tax account balances drive ordinary income in retirement, potentially increasing Social Security benefit taxation and triggering Medicare IRMAA surcharges, and evaluate Roth conversion strategies to reduce future RMDs
Apply a qualified charitable distribution (QCD) strategy for retirees age 70.5+ by directing up to $105,000 annually from an IRA directly to a qualified charity to satisfy RMDs without increasing adjusted gross income, thereby avoiding the inclusion of RMD amounts in taxable income
Describe the inherited IRA rules under the SECURE 2.0 Act requiring most non-spouse beneficiaries to withdraw the entire inherited IRA within 10 years of the original account owner's death and identify the eligible designated beneficiaries (spouse, minor children, disabled or chronically ill, those within 10 years of age) who may use the life expectancy method
4Social Security 10 topics
Describe the Social Security benefit calculation based on the 35 highest earning years indexed for inflation producing the Average Indexed Monthly Earnings (AIME) which is then transformed through a progressive benefit formula to produce the Primary Insurance Amount (PIA)
Identify full retirement age (FRA) as 66-67 depending on birth year (67 for born 1960+) and explain that claiming at 62 reduces benefits permanently by up to 30% while delaying past FRA to age 70 increases benefits by 8% per year (32% total maximum increase)
Apply the Social Security breakeven analysis by calculating the age at which lifetime cumulative benefits from delaying to FRA or age 70 exceed those of early claiming at 62, typically breakeven at age 78-82, to inform claiming strategy based on health and longevity expectations
Describe spousal Social Security benefits allowing a non-working or lower-earning spouse to claim up to 50% of the higher earner's PIA at FRA, and survivor benefits allowing a surviving spouse to receive up to 100% of the deceased worker's benefit
Apply Social Security taxation rules: up to 50% of benefits are taxable when combined income (AGI + non-taxable interest + half of SS) exceeds $25,000 (single) or $32,000 (MFJ), and up to 85% are taxable above $34,000 (single) or $44,000 (MFJ)
Analyze the claiming strategy trade-offs for a married couple where one spouse has significantly higher lifetime earnings by evaluating whether the higher earner should delay to 70 to maximize the survivor benefit for the longer-lived spouse
Describe how working while collecting Social Security before full retirement age triggers the earnings test reducing benefits by $1 for every $2 earned above $22,320 in 2024 and explain that the withheld benefits are later restored as a permanently higher monthly amount after reaching FRA
Apply Social Security statement review by accessing my Social Security account online to verify the earnings history for accuracy, estimate projected benefits at 62, FRA, and 70, and identify if any years have zero or very low earnings that should be corrected or filled through additional work
Describe the Social Security Windfall Elimination Provision (WEP) that reduces SS benefits for workers who receive a pension from a non-covered employer (state and local government, some non-profits) and the Government Pension Offset (GPO) that reduces spousal and survivor benefits for the same group
Analyze the impact of years out of the workforce (caregiving, school) on Social Security benefits by identifying that each zero-earnings year below the 35 highest drags down the AIME calculation and evaluating how even part-time work during these periods can replace zeros to permanently increase lifetime benefit amounts
5Withdrawal Rate and Retirement Modeling 8 topics
Describe the 4% safe withdrawal rate guideline derived from the Trinity Study showing a 4% annual withdrawal from a balanced 50/50 stock-bond portfolio historically sustained 30 years of retirement in 95%+ of historical scenarios
Apply the 4% rule to estimate required retirement portfolio size by dividing desired annual spending by 0.04 (multiply by 25) and evaluate whether this multiple is achievable given current savings rate and time horizon
Apply retirement income replacement rate estimation by calculating 70-80% of pre-retirement gross income as a target annual retirement budget and adjusting for expected changes in expenses (reduced commuting, paid-off mortgage, increased healthcare, new leisure spending)
Analyze the limitations of the 4% rule for early retirees (30-40 year horizons), those retiring into a low-expected-return environment, and those with high fixed expenses and evaluate dynamic withdrawal strategies (guardrails, flexible floor) as alternatives
Apply the tax-efficient withdrawal sequence in retirement: first draw from taxable brokerage accounts (low capital gains rates), then traditional IRA/401(k) up to the top of the 12% bracket, then Roth IRA for spending above that threshold to minimize lifetime tax burden across a 20-30 year retirement
Describe the bucket strategy for retirement income management dividing assets into 3 buckets: Bucket 1 (1-2 years of expenses in cash for immediate needs), Bucket 2 (3-10 years in bonds and CDs to refill Bucket 1), and Bucket 3 (stocks for long-term growth) to psychologically insulate equity investments from forced selling during market downturns
Apply inflation adjustment to retirement expense projections by calculating the real spending needed in year 10, 20, and 30 of retirement using 3% average inflation and explaining why failing to account for inflation consistently leads retirees to run out of money even when the nominal portfolio balance appears adequate
Describe longevity risk as the risk of outliving retirement assets and explain how life expectancy statistics (average 85 for a 65-year-old man and 87 for a 65-year-old woman, with a 25% chance of reaching 90+) require planning for a 25-30 year retirement horizon rather than the 20-year assumption used in some older projections
6Medicare Basics 7 topics
Identify the four parts of Medicare: Part A (hospital insurance, premium-free for most at 65), Part B (outpatient medical insurance, standard premium ~$174.70/month in 2024), Part C (Medicare Advantage, private plan combining A+B+D), and Part D (prescription drug coverage)
Apply Medicare enrollment timing rules by identifying the Initial Enrollment Period (7-month window around 65th birthday), Special Enrollment Periods for those with qualifying employer coverage, and the consequences of late enrollment including permanent premium penalties for Part B (10% per 12-month delay) and Part D
Describe IRMAA (Income-Related Monthly Adjustment Amount) surcharges that increase Part B and Part D premiums for beneficiaries with income above $103,000 single ($206,000 MFJ) and explain how Roth conversions and pre-retirement income spikes can trigger IRMAA two years later
Analyze the choice between Original Medicare with a Medigap (Medicare Supplement) policy versus Medicare Advantage by comparing premium costs, provider network flexibility, out-of-pocket maximums, and coverage for travel and specialized care based on anticipated healthcare needs
Describe the Medicare Part D coverage gap (donut hole) where beneficiaries pay 25% of covered drug costs after total drug spending reaches a threshold ($5,030 in 2024) until reaching the catastrophic coverage threshold and explain how biosimilars and generic drugs reduce spending in this gap
Apply healthcare cost planning for early retirees (ages 55-64) by identifying ACA marketplace plans with income-based premium subsidies, COBRA continuation from employer coverage, and health sharing ministries as the three main bridge options before Medicare eligibility at 65
Describe Medigap (Medicare Supplement) insurance plans standardized by CMS in Plans A through N that fill gaps in Original Medicare including the Part A deductible (~$1,632 in 2024), Part B coinsurance (20%), and excess charges and explain that Medigap has no network restrictions allowing treatment anywhere Medicare is accepted nationwide
7Pensions and Catch-Up Contributions 11 topics
Describe defined benefit pension plans as employer-funded retirement plans guaranteeing a monthly income based on a formula (typically years of service × salary × benefit multiplier of 1-2%) in contrast to defined contribution plans where the employee bears investment risk
Apply the pension lump-sum versus annuity decision framework by comparing the lump sum's present value, investment return assumptions, break-even age, and survivor benefit to the annuity's guaranteed monthly income and longevity protection
Apply age-50 catch-up contribution rules allowing an additional $7,500 to 401(k) plans and $1,000 to IRAs in 2024 and the SECURE 2.0 super catch-up provision of $11,250 for 401(k) participants aged 60-63 beginning in 2025
Analyze the value of catch-up contributions for a worker starting serious retirement saving at age 50 by projecting the additional portfolio value from maxing catch-up contributions for 15 years at a 7% annual return versus saving at standard contribution limits
Describe pension risk factors including underfunded corporate pensions, the PBGC (Pension Benefit Guaranty Corporation) insurance covering private pensions up to approximately $81,000/year in 2024, the lack of PBGC protection for public pensions, and strategies for employees to evaluate their pension's financial health
Apply the retirement readiness checklist by verifying: (1) beneficiaries on all accounts are current, (2) Social Security earnings record is accurate, (3) 401(k) investment allocations match risk tolerance, (4) Medicare enrollment timeline is tracked, and (5) an estimated retirement budget has been drafted at least 5 years before target retirement date
Analyze the financial tradeoffs of delaying retirement by 2-3 years including additional years of contributions and compounding, reduced withdrawal period, higher Social Security benefit from delayed claiming and additional high-earning years replacing lower-earning years in the 35-year calculation, and reduced Medicare bridge insurance cost
Describe SECURE 2.0 Act key provisions including raising the RMD age to 73 (75 for those born 1960+), increasing catch-up contribution limits for ages 60-63, requiring automatic enrollment in new 401(k) plans, and expanding Roth options for employer matches
Apply the personal retirement savings rate benchmark of 15% of gross income (including employer match) as the minimum rate for a worker starting at age 25 to accumulate 10-12x final salary by age 65 and calculate how much higher the rate must be for later starters
Identify the signs of a financially healthy employer retirement plan including low expense ratios (below 0.50% fund-weighted average), index fund availability, automatic enrollment with at least 3% default deferral, employer match above 3%, and regular investment option reviews by a plan fiduciary
Apply the ERISA beneficiary designation audit for all retirement accounts and life insurance policies by confirming that named primary and contingent beneficiaries are current, that minor children are not named directly (requires a trust or UTMA custodianship), and that accounts align with the overall estate distribution intent
Scope
Included Topics
- 401(k) traditional and Roth: mechanics, employer match, contribution limits ($23,000 employee + $7,500 catch-up at 50+ for 2024), vesting schedules, investment options, rollover rules; Traditional IRA and Roth IRA: contribution limits ($7,000 + $1,000 catch-up for 2024), income phase-outs for deductibility and eligibility, backdoor Roth strategy overview; SEP IRA and SIMPLE IRA: contribution limits, eligibility (self-employed and small business); Required minimum distributions (RMDs): age 73 start, uniform lifetime table, penalty for missed RMDs; Social Security: full retirement age by birth year, early claiming at 62 (reduction), delayed claiming to 70 (8%/year increase), spousal benefit (up to 50% of worker's PIA), survivor benefit, how benefits are taxed; safe withdrawal rate (4% guideline and its assumptions and limitations); retirement expense modeling and replacement rate (70-80% of pre-retirement income); Medicare basics: Part A hospital, Part B medical, Part C Medicare Advantage, Part D prescription, IRMAA income-related premium surcharges; pensions (defined benefit plans): vesting, benefit formula, pension vs lump sum decision; catch-up contributions for those 50+ and 60-63 SECURE 2.0 provisions
Not Covered
- Estate planning, trusts, and inheritance tax strategies beyond basic beneficiary designation awareness
- Annuity product mechanics and insurance company analysis at depth
- Long-term care insurance at depth (covered in Insurance Fundamentals domain)
- International retirement accounts and expatriate planning
- Detailed Social Security Disability Insurance (SSDI) rules beyond brief mention
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