Are you retired or are you thinking about retiring soon? Did you run out of money in retirement? With the uncertainty of the economy and markets, many retirees today are concerned with the survival of their wealth, known as longevity risk. Although not thought about often, the reverse situation can also be a problem. Coming to the end of your life with a lot of money and many unfulfilled dreams is not pleasant either. With that in mind, here are our suggestions on how to stay retired and enjoy it. Having a budgetA carefully compiled budget can help you keep control of your expenses and is a good starting point for estimating your monthly withdrawal needs. Many think they will spend less in their retirement years, but for most people it may not. Set a realistic payout rate A safe payout rate is an amount of money expressed as a percentage of your portfolio that can be paid out each year. This is the interest rate most likely to leave just the right amount of money at the end of a retiree’s life. Spend Less During Troubled TimesWhen the economy is in trouble and your portfolio is falling, consider spending more conservatively. Establish an emergency reserve An emergency reserve will help you avoid unexpected withdrawals of funds from your custody account. Think about inflation Inflation is the general increase in the cost of goods and services. One example is a postage stamp. A postage stamp costs $ 0.55 today, but it was only $ 0.04 in 1958. Be Realistic How Much Do You Actually Spend? Can this amount be reduced? Did you consider health care costs? Plan Social Security Benefits Carefully review your social security benefits and develop a strategy to maximize them. The amount you will receive will depend on a few factors such as: You may want to consider your cash flow needs, health, and expected longevity when setting a start date. Also take into account the survivor benefits for your spouse. Consider working part-time. Earning a retirement income means spending less from your portfolio, which means more of your savings will stay invested and growing. Make sure you assess the impact of work on your social security benefits. Minimize Taxes Understand the types of accounts you have. For example, a retiree could have taxable investment accounts, traditional IRAs, and Roth IRAs. Other than non-deductible contributions, distributions from traditional IRAs are generally taxed as ordinary income. If certain parameters are met, distributions from Roth IRAs are generally tax-free. Depending on your date of birth, you will need to make the required minimum payouts from your traditional IRA from the age of 70 ½ or 72 years. You need to consider the impact this will have on your income taxes. Roth IRAs do not have this requirement. If you have both a retirement and an after-tax account, think about where you can get the most tax-efficient income. Perhaps taking money out of a retirement plan account while in a low tax bracket is a wise decision. Consider putting money that you don’t spend in an after-tax account for future use. Own Some Stocks Having a few stocks in your portfolio can help your retirement income keep pace with inflation. Make sure the equity portion is right for you. Too much equity exposure during volatile markets can put you off at inopportune times, while too little exposure can cause inflation to eat up your purchasing power. There is a wealth of research studies and retirement articles online that could really help you plan. You can also get professional help such as: B. from a certified financial planner who can create a retirement plan and monitor the results. As you can see, it takes a little work to stay in retirement, but it is well worth the effort for the peace of mind it can bring.
Are you retired or are you thinking about retiring soon? Did you run out of money in retirement? With the uncertainty of the economy and markets, many retirees today are concerned with the survival of their wealth, known as longevity risk. Although not thought about often, the reverse situation can also be a problem. Coming to the end of your life with a lot of money and many unfulfilled dreams is not pleasant either.
With that in mind, here are our suggestions on how to safely retire and enjoy it.
Have a budget
A carefully planned budget can help you keep control of your spending and is a good starting point for estimating your monthly withdrawal needs. Many think they will spend less in their retirement years, but for most people it may not.
Set a realistic payout rate
A safe payout rate is an amount of money, expressed as a percentage of your portfolio, that can be paid out each year. This is the interest rate most likely to leave just the right amount of money at the end of a retiree’s life.
Spend less in difficult times
If the economy is in trouble and your portfolio is falling, consider spending more conservatively.
Set up an emergency reserve
An emergency reserve will help you avoid unexpected withdrawals from your portfolio.
Take inflation into account
Inflation is the general increase in the cost of goods and services. One example is a postage stamp. A postage stamp costs $ 0.55 today, but it was only $ 0.04 in 1958.
Be realistic
How much do you actually spend? Can this amount be reduced? Did you take healthcare costs into account?
Benefits plan
Review your social security benefits carefully and develop a strategy to maximize them. The amount you will receive will depend on a few factors such as: B. the age at which you started your services and your professional career. You may want to consider your cash flow needs, health, and expected longevity when setting a start date. Also take into account the survivor benefits for your spouse.
Consider working part-time
Earning a retirement income means you have less to spend out of your portfolio, which means more of your savings will stay invested and grow. Make sure you assess the impact of work on your social security benefits.
Minimize taxes
Have a good understanding of the types of accounts you have. For example, a retiree could have taxable investment accounts, traditional IRAs, and Roth IRAs. Other than non-deductible contributions, distributions from traditional IRAs are generally taxed as ordinary income. If certain parameters are met, distributions from Roth IRAs are generally tax-free.
Depending on your date of birth, you will need to make the required minimum payouts from your traditional IRA from the age of 70 ½ or 72 years. You need to consider the impact this will have on your income taxes. Roth IRAs do not have this requirement.
If you have both a retirement and an after-tax account, think about where you can get the most tax-efficient income. Perhaps taking money out of a retirement plan account while in a low tax bracket is a wise decision. Consider putting money that you don’t spend in an after-tax account for future use.
Got a couple of stocks
Having a few stocks in your portfolio can help your retirement income keep pace with inflation. Make sure the equity portion is right for you. Too much equity exposure during volatile markets can put you off at inopportune times, while too little exposure can cause inflation to eat up your purchasing power.
There is a wealth of research studies and retirement articles online that could really help you plan. You can also get professional help such as: B. from a certified financial planner who can create a retirement plan and monitor the results. As you can see, it takes a little work to stay in retirement, but it is well worth the effort for the peace of mind it can bring.
