How to avoid running out of money when you retire
Are you worried that you won’t have enough money to fund your retirement? It’s understandable if this question is keeping you up at night. With all the excitement and freedom retirement brings, it can also include a high level of anxiety. The following suggestions can help you avoid running out of money when you’re no longer earning a regular paycheck.
Plan and plan some more
The best way to prep for retirement is to make a plan that covers every possibility and projected expense. Your comprehensive plan should start well before you actually retire so you have enough time to save and put your retirement plan into action.
Some questions you should consider addressing in your plan include what income you would need to fulfill your retirement, whether you will have additional income sources in retirement, what the possible deficiencies in your income could be, and how will you fix them, advises Tony Drake, writer for Kiplinger.com.
He suggests talking with a financial professional to help create your plan and reviewing it regularly to make sure it will support you in retirement.
Take advantage of your company’s retirement plan
If you work for a company that offers a company-sponsored retirement plan, make sure you activate automatic contributions. This is the first step in your retirement planning, according to Georgina Tzanetos, writer for Bankrate.com.
“Even 2 or 3% of your monthly income contributed towards retirement can make a big impact,” she adds. “Setting up automatic contributions also eliminates the most difficult part of saving and investing — getting used to your monthly paycheck after withdrawing money intended for other goals.”
Reduce what you pay in taxes
Regular working hours and a paycheck may cease in retirement, but taxes and your responsibility to pay them do not. If you’re planning to pay your bills by withdrawing from your Social Security benefits or your company-sponsored retirement account, you need to realize those transactions are taxed and plan accordingly, according to Domenic Rizzi, writer for Kiplinger.com.
“One fairly simple way to reduce your tax liabilities during retirement is to engage in strategic Roth IRA conversions between when you retire and when you need to begin taking required minimum distributions at age 72. This is a ‘sweet spot’ for Roth conversions because you will likely be in a lower tax bracket as long as you delay tapping your retirement accounts,” he adds.
Be strategic with investments
Just putting your money away for a rainy day is not enough to fund your retirement. You want the money you save to make money! And to do that, you need to consider investing your money into accounts or funds that generate substantial interest such as dividend stocks and government bonds, suggests Tzanetos.
There are many things you can do to help ensure your retirement plan offers you the money you need to enjoy your time and pay your bills. It’s best to start planning as soon as possible for retirement, while you’re working, and consult with a financial professional. They can help you create a budget, plan, and help establish your investment portfolio, so your carefree years are also free from money woes.
The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.
Source: IMakeNews, Inc.
