Financial Planning for Retirees
There are a number of decisions that may or may not factor into your goals in life, but one key element to saving money is making sure you have enough to eventually retire. Unfortunately, many times people will forget to include one major point to retirement, and so find themselves in financial trouble years after giving up work: having enough to stay retired.
Because of this oversight, more and more of those over the age of 55 are going back to work, often getting minimum wage and taking long hours just to survive. To make sure this doesn’t happen to you, there are a few important things to keep in mind:
What are your annual expenses? This is one very important thing to consider when figuring out how much you will need to retire. Always add in other elements, such as inflation, and put away a certain amount for unforeseen events, such as car or home repair, or emergencies.
What investments do you currently have, or can you purchase, that will allow for sufficient growth? Saving isn’t enough. You need to have an active portfolio with investments that will continue providing income through your retirement years. Make sure you have a well balanced portfolio, as many several investments with great potential.
What can I withdraw annually from my investments without damaging my purchasing power? This is a question many have, and it will depend mostly on the size of your portfolio, as well as what you plan on leaving behind as a part of your estate. Try to draw as little as possible to maintain your lifestyle.
What accounts should be drawn from first? You should always make use of taxable accounts before dipping into tax-deferred, such as 401(k)s, so that interest can increase the amount to its highest possible limit before you use it as living expenses. It is wise to allow your investment accounts to grow to full season before relying on them as income.
What about Social Security? Social Security is always a valuable option, especially if you have a weak investment portfolio. However, you may want to wait until 65 before applying, as signing up at 62 (the minimum age) can greatly reduce the monthly amount you receive on your checks. However, Social Security, added to any valuable taxable accounts is a great way to maintain a decent lifestyle all through your retirement age, without having to return to work in your golden years.
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