The transition from work to retirement can be challenging
The following are 5 factors that can determine how secure and successful your retirement will be so that you can live a healthy retirement.
Don’t retire too early.
If you have already retired, don’t fret, the rest of this article will help you by offering ideas that you can still use.
Retirement can be tempting, no work schedules, no commuting, no time constraints, etc. However, there are emotional and financial reasons not to retire too early. I believe that a person must have a purpose in life, a reason to get up in the morning and do something productive in order to experience a healthy retirement.
You can be retired and taking it easy, but should you do nothing but watch television or sleeping in, will not lead to a happy and satisfying retirement.
Financially, retiring too early can be hazardous to your financial health. Each year of retirement means you have one less year of savings and one more year of spending.
Watch your taxable income level.
Your tax status and therefore your tax bill can very during your retirement based upon how you manage your money. When should you start taking Social Security which will be taxable to some extent?
When should you take your minimum distributions from your retirement account(s)? Should you wait until you must, or should you start earlier to spread out the income from that source?
Don’t take Social Security too early or too late.
There is a natural instinct often based upon fear that one should take Social Security as soon as one is eligible.
Taking Social Security too early can cost you up to a 32% decrease in your lifetime benefits depending upon your age. With that said, there may be a valid reason not to wait until age 70 to claim your Social Security benefits.
Generally, it is best to wait until your full retirement age before taking benefits. Taking your benefits before your full retirement age while you are still working is not a good idea. That is because there is an income limit that kicks in while you are working that will lower your Social Security benefit.
If you have a family history of poor health and a short lifespan, then perhaps taking your benefits when you can, is a wise decision. Conversely, if you have longevity in your DNA, perhaps waiting until age 70 is a wise decision.
At Retirement Solutions, we use a computer program that will help you decide when to take your Social Security benefits based upon your specific situation. Our clients have found this program to be of immense help in determining when to claim their Social Security benefits.
The difference in how much you will get from Social Security based upon the optimum time to collect can be in the hundreds of thousands depending upon one’s situation.
Consider withdrawal rates from your assets to determine your budget.
There is a great debate within my industry as to how much to take out of your assets per year in order to provide you with a comfortable retirement without running out of money. The numbers range from a low of 3% to as much as 6%. That is a huge difference!
Part of the answer depends upon how long you will live. The longer you are in retirement, the lower that number should be. A shorter time horizon will afford you a larger percentage of your money that you can withdraw each year.
In general, as we get older, our needs for money decrease as we become less active. However as we get older, higher health care costs kick in.
Bottom line, be flexible and be prepared to make changes on an annual basis. Retirement Solutions also uses a computer program based upon your specific situation to help guide you with this subject. We can help answer this question for you during this period in your life.
Stay away from expensive payments or financial commitments.
Being overly generous with financial commitments such as car payments, or becoming the “Bank of Me” to family and friends, will lower your chances of sustaining a secure retirement. Although your bucket of money may seem large, remember, you may have to sustain that bucket for 20-30 years. What will inflation do to your money over that period of time?
At Retirement Solutions we have the experience, knowledge and resources to help you identify your retirement goals and then achieve them so that you experience a healthy retirement. Should you wish to take advantage of a 15-minute, no-obligation, no-cost consultation, click the “Schedule a Consultation” found in the upper right of this page. You talk, we listen, nothing more.