Most Americans’ primary financial objective is to save for retirement. However, for many people, that goal appears to be focused on ambition rather than actual action. According to some financial planners, you should save enough such that your retirement income equals 70-80% of your pre-retirement salary. Saving for retirement needs careful preparation, which includes examining your current assets, the number of years until retirement, and how much you’ll be able to save during your pre-retirement years. The following are some suggestions to help you plan your retirement journey. Discover Potential Earnings in Your Insurance You may be unaware that you may utilize life insurance for purposes other than insuring your life. However, many elderly Americans are taking advantage of their life insurance policies to generate tax-free income. Withdrawals will reduce death benefits, but there may come a time when you don’t need to worry about maintaining those numbers in the high range. Consult with your financial advisor about purchasing a life insurance policy for this purpose. Plan Your Future if You’re Already 40 In our society, where we emphasize how old we are, turning 40 might feel like the beginning of the end. However, most people in their forties still have 20 to 25 years of work. Rather than relying on your financial acumen-or lack thereof-seek the guidance of a financial planner. Sit down with a financial advisor and develop an investing strategy to earn dividends that conventional savings or money market accounts cannot match. The idea is to invest prudently yet also aggressively. Whether you invest in a 401(k) or an IRA, your financial advisor can also help you determine a tax strategy for retirement savings. During your working years, you can pay taxes on your retirement savings now-Roth accounts-or pay no income tax today but pay income tax on retirement withdrawals (traditional accounts). The marginal tax rate increases as your salary increases since the United States has a progressive tax system. Suppose you’ve been saving on autopilot in one of these accounts in your thirties. In that case, it’s time to run the numbers and determine if those accounts still offer you the best value in your forties. Suppose you’ve hit your prime working years and haven’t saved much for retirement. In that case, a conventional account may help you save money by delaying taxes until retirement. Suppose you have a huge amount in a standard 401(k) or IRA. In that case, you may need to change your plan so that you are not in an exceptionally high tax bracket when compelled to take minimum necessary distributions in your seventies. Postpone Retirement Consider working past the traditional retirement age to improve your retirement fund. You can use the Social Security Administration’s internet calculator to estimate your retirement age depending on your birth year. Working longer and retiring later may allow you to earn more money while delaying receiving Social Security payments. The longer you wait to begin receiving benefits, the more money you’ll have to enjoy your senior years. Open Either an IRA or a Roth IRA If your employer does not provide a 401(k) plan, you should not worry. A bank or broker will be able to help you set up an individual retirement account (IRA). Tax-deductible contributions and tax-free growth are two of the many advantages these have over 401(k) plans. On the other hand, you’d have many more opportunities for investment. Your portfolio can be created using stocks, bonds, mutual funds, and other assets. In contrast, a Roth IRA can be opened if you are concerned about a large tax hit when withdrawing funds from retirement accounts. Retirement withdrawals from these accounts are not subject to taxes. Get Assistance with Retirement Planning. We understand if you’ve reached this point and are feeling overwhelmed. There are numerous moving pieces in retirement planning. Consider employing a fee-only financial planner if you believe you would benefit from some impartial expert advice. Some will manage your assets (and charge a percentage of those assets) while also giving retirement analysis; others will advise and charge by the hour or project. Checking in with a retirement professional every five to ten years, especially before you retire, is a good idea to ensure you’re doing everything necessary to have the retirement you’ve always desired.
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Phone: 2624906519
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30 + years as a Financial Planner. Securities (Series 1,7, and 65) and Insurance Licensed. Retirement Planning including the actual planning of where your income will come from as well as a discussion of products to get you there. The market has been volatile since Covid broke out and many people are not comfortable with this. If you are retired we will look at your total income and tax situation. If you are still working we have some more time to plan.
