You save and accumulate money for retirement for one main reason – to withdrawal from that nest egg to provide yourself with an income. As millions of Baby Boomers stand at the edge of retirement, the main question they ask themselves is do they have enough money and income sources to last throughout retirement. Many will have to look beyond Government programs to sustain the lifestyle they want in retirement. With longevity increasing, many also will have to make sure their retirement plans and income will last a very long time. How to plan appropriately will involve many factors and considerations.
Carefully Time Your Retirement
Withdrawing money from a retirement account during a bad investment market might have severe damaging effects on your income in the latter stages of your life. Delaying retirement or drawing less income during down markets can make sure your retirement income lasts as long as possible.
Only Fixed-Income Investments May Not Be Enough
While it is good to rely of fixed-income investments for a steady stream of income, it may not always be enough to sustain a retiree’s standard of living. Inflation and today’s low interest rate economy may bite into the purchasing power of regular payments. You many need to have some allocation of growth stocks or higher yield investments in your basket.
Implement a Needs Based Withdrawal Plan
Many people use a flat rate withdrawal plan, which many times gives more income than is needed. This can lead to over spending. A needs based withdrawal plan can save money and put you in a better position for the long term.
Tax Planning Is Critical
The majority of money saved for retirement is in pre-taxed traditional retirement plans like an IRA, 401(k), 403(b), etc. All of this money is fully taxable upon withdrawal. Having a tax management system in place to become more tax efficient is critical in maximizing your retirement income.
You save money for retirement for one primary reason – to have enough income to live throughout retirement. So the eventual outcome of saving money for retirement is income. Get the proper education by registering for one of our upcoming classes. Click here to find the location nearest you.