If you haven’t done much retirement planning or saving there are several steps you can take to get your planning on track. At our office we regularly meet with clients, creating financial plans to help them reach their goals while staying within their budget. We’d be pleased to do the same for you.
Your Retirement Game Plan
- Start Now — Define retirement goals and develop a strategy to tackle them. By starting early you can reduce the likelihood of having to play catch-up later.
- Take advantage of compounding — Like nearly any other savings plan dollars saved in a retirement account may benefit from compound growth.
- Open an Individual Retirement Account (IRA) — A Traditional IRA or Roth IRA may significantly improve your retirement readiness, especially if you do not have access to an employer-sponsored retirement savings plan or if you are already contributing the maximum amount to your employer plan. Tax-advantaged accounts, such as IRAs and 401(k) plans offer significant advantages.
- Start an Emergency Fund — Life does not often work in a neat, mathematical formula. There may be market crashes or unexpected health expenses to meet. Therefore, each of us needs an emergency fund. Place 3 to 6 months’ worth of expenses into a relatively liquid investment, such as a money market fund, to help avoid raiding retirement savings in the event of a financial emergency.
- Get a portfolio check-up — Periodically you should refine your retirement strategy. Review your retirement accounts at least once a year. Someone in or entering their prime earning years may be able to invest more with capital growth as their objective. A pre-retiree might be thinking more of capital preservation as their working years may be limited.
- Be Prepared for Change – With a retirement approaching you may need to adapt your spending strategy to meet a changing environment. You'll need to consider your age, life expectancy/health status, marital status, living expenses and rate of return on your investments.
- Other Products -- Today there are many so-called “guaranteed-income products,” most of which have been designed to help protect retirees from running out of retirement income regardless of market conditions or increased longevity. Insurance can help families manage the risks of not living as long as expected, while various retirement-income products can help manage the risk of outliving your retirement savings.
- Tax Code Basics – Familiarizing yourself with tax code basics can help your money last longer. If you plan on working during retirement note that some job-hunting and moving expenses if for a first job, may be deductible. Also consider the child care credit, refinancing points and certain energy-saving home improvements. Starting a business? Self-employed individuals may also deduct Medicare premiums.
If parents pay back a child’s student loans, the IRS views the transaction as if money was given to the child, who then paid the debt. A non-dependent child may be eligible to deduct up to $2,500 of student-loan interest, even if dad and/or mom paid.
Retirement Income Stream Checklist
- Consider your health and personal status
- Understand your Social Security payments
- Utilize tax-advantaged investments
- Account for inflation
- Be sure you have adequate insurance
- Realize the true value of your assets
- Put an estate plan in place.