These are the new rules for saving for retirement

In the good old days, employers offered traditional pension plans that paid a set amount monthly or a lump sum. That’s mostly gone the way of the dinosaur. Another linchpin of retirement, a Social Security check, may not be as hefty in the next decade if the program's funds aren't shored up by Congress.

The retirement landscape is different these days, and there’s new legislation that kicks in this year. With that said, do you need to make adjustments to the retirement strategy playbook? What pages should you keep, and which should you bid adieu? 

What’s new

Before delving into what to keep and to toss, be on top of what’s new. Many changes are already in effect from the SECURE ACT 2.0, legislation passed in 2022 that made sweeping changes to 401(k) plans, particularly plans sponsored by small businesses.. New provisions take effect in 2025.

All 401(k) and 403(b) plans established after Dec. 29, 2022, must automatically enroll eligible employees at a contribution rate between 3-10% of their salary. In 2025, the catch-up contribution to their workplace retirement accounts increases for those ages 60 to 63 from $7,500 to up to $11,250.  There is also expanded coverage for long-term, part-time employees.

Starting in 2025, non-spouse beneficiaries of inherited IRAs must take distributions from their account every year until the end of the 10-year period, when all the money should be withdrawn. If you don’t take the distribution, you’ll face penalties.

"These changes might be a reason to reconsider how you're saving for retirement, especially with the timing of your withdrawals and how much you're putting in each year. Consider consulting a financial adviser to tailor your strategies to take advantage of the new rules," said Brandon Blakeley, a retirement expert and senior living adviser at Mirador.

What to toss

"The old '4% rule' for retirement withdrawals is no longer the golden standard. Economic cycles and volatile markets demand dynamic withdrawal strategies adjusting annual withdrawals based on market performance and portfolio health," said Ali Zane, CEO of Imax Credit Repair.

For example, cutting back to 3.5% in down years and splurging slightly above 4% in bull markets allows your portfolio to outlast unpredictable conditions. Pair this with a buffer fund (e.g. cash reserves) to avoid selling assets during downturns, he said.

Tax diversification is the new asset diversification. "It’s no longer just about stocks and bonds. Balancing tax buckets Roth (tax-free), Traditional IRA (tax-deferred) and taxable accounts is the real game-changer for retirement flexibility," said Zane. 

For instance, leveraging a Roth account during high-tax year and taxable accounts when capital gains are favorable lets retirees maintain control over their effective tax rate. This mix also provides wiggle room for unplanned expenses, such as health care costs, said Zane.

Another classic piece of advice was the 60/40 — to have 60% of your retirement money in stocks and 40% in bonds. "The 60/40 asset allocation model has been a staple for decades, but with the low interest rates we’ve seen in recent years, the bond portion of that strategy may not be as effective in generating income," Blakeley said. "Bonds traditionally offer a stabilizing role in a portfolio, but the current economic environment has made many reconsider the reliability of that allocation. This can be modified based on risk tolerance and time horizon, as some investors may move toward a more growth-oriented strategy or even alternatives such as real estate or commodities."

One of the most popular "old rules" of retirement was if you saved X amount, you’d be set for retirement. There were debates on what the "magic number" was — $1 million, $5 million or some other number, but $1 million was typically touted as the holy grail. "Generic retirement targets — thinking you'll need exactly $1 million — is outdated. Life’s costs, like health care and rising costs due to inflation, usually break those molds. Instead, Iook closely at your expected future costs and start planning from there," said Alex Langan, chief investment officer at Langan Financial Group. 

Similarly, 65 is no longer necessarily the age you’ll say adios to the 9 to 5 gig. "Plan for a flexible retirement. The days of working till 65 and then hitting the golf course are over for many. I've had clients who 'retired' multiple times, mixing periods of work and leisure. This can take the pressure off your savings and keep you engaged," said Michael Ryan, a financial expert at michaelryanmoney.com. You may need to work part-time at 65 to bridge a savings gap, or delay retirement.

Age-old strategies that still work

There is truth in the saying "If it ain’t broke, don’t fix it."

"While new rules offer opportunities, the playbook's core principles — diversification, disciplined saving and consistent contributions — remain timeless. The best strategy combines these foundational practices with adjustments for today’s realities," said Adam Garcia, a certified financial planner and founder of The Stock Dork.

Diversify, diversify, diversify. Having a variety of assets is as important as it always was, if not even more so. "Traditional investments like stocks and bonds are important, but they might not be enough in today’s unpredictable market," said Kelly Ann Winget, founder and CEO of Alternative Wealth Partners. "Take calculated risks with alternative investments. Real estate, private equity and precious metals can offer higher returns and protect against market downturns. These alternatives offer high returns and can provide passive income that might replace your active income in retirement."

Wealth is a marathon, not a sprint. Slow and steady still wins the race. "Markets will fluctuate, but sticking to your investment strategy is key," Winget said. "Avoid panic-selling or chasing quick gains. Consistent investing and a disciplined approach pays off. Automate your savings and investments and review your strategy regularly to adjust for life changes or market shifts. Patience and discipline are essential for a comfortable retirement."

Finally, Langan recommends people "start saving early, stick with it and always be flexible to adapt. Team up with a fiduciary advisor to help you mix the old with the new and to make sure your retirement plan is customized perfectly for you."