Planning for retirement can be overwhelming. There is a lot of preparing that needs to happen in many different areas of your life. A well planned retirement takes just a little bit of time and can make a world of a difference to how your retirement life style will be. Here are six steps to a well planned retirement.
Timing your benefits – Timing your Social Security benefits can impact your retirement greatly. Delaying your Social Security until the age of 70 can increase your eligible amount compared to collecting at 62 (the age you are eligible to start collecting). Understanding exactly how Social Security works can take some time so it is best to talk with a Social Security expert. Timing your benefits can also affect Medicare. To be covered under Medicare you can enroll at age 65. Failing to sign up for coverage can cost you monthly penalties that stay in place for life. Talk with a Medicare expert before your 65th birthday to know what options you have.
Re-assess your investments – After medical costs one of the biggest costs for retirement nest eggs is inflation. While there is no exact number to save extra for to account for inflation it is something very important to consider. Each dollar you save will have less purchase power in the following year because of inflation. Your investment strategies should be aggressive enough to make something out of planning but conservative enough to not completely shock you when the market takes a dip. Your investments should also be at the ready so it is important to remember to not lock up your investments but keep them at the ready for liquidity.
Financial advisor – Our recent post gave some information about financial advisors. If you have any amount of investments it is critical to have a financial advisor review your investment plan at least once a year.
Minimize your tax costs – Typically withdraws from retirement savings accounts come with tax costs upon withdraws. Roth IRA and Roth 401(k) plans reduce your taxes over the long run. Contributions are made with after tax dollars, but the accounts grow tax-free so there are no federal or state income taxes due on withdrawals.
Assess your health and family health – No one has a crystal ball to see into the future, but you can get an idea for your health into the future. Research your family’s history for health issues. Once you determine what health issues your family has look into ways to reduce your risks. Health costs are the number reason of affecting retirement budgets.
Review your final plans yearly – Talking about your final wishes with your family or just planning for them yourself can be a weird, changeling part of retirement planning. However, it is a very important part of your retirement plan for your family and heirs. You should have your will in order and have all your important documents in safe place like a fire proof document box. Let a family member know where to find these important documents and remember to update them on a regularly basis. Tax laws for inheritances can change yearly depending on what state you are in and can affect your heirs.
These six steps for a well planned retirement do not have to take up a lot of your time. The best part is once you complete these things you will have some peace of mind knowing that you are doing the best you can for your retirement today and in to tomorrow.
Do you have any tips for a well planned retirement?