Hopefully, all your presents are wrapped and under the tree by now. This is a time of year when we’re mostly focused on other people, but once you’ve distributed all of your gifts, consider giving yourself the gift of a retirement plan. To help you get started, here are three questions your retirement plan should answer:
1. Where Will My Retirement Income Come From?
Think about all the places your retirement income could come from and how much will come from each source. You’ll likely claim a Social Security benefit in retirement, and you can check your earnings statement to see how much you would receive if you claim at, before, or after your full retirement age. You may also have investment income and a substantial amount saved in a 401(k) or IRA. Review your finances and projected income needs in retirement, and see where the gaps are.
2. How Can I Make It Last for the Rest of My Life?
One of the hardest things about retirement planning is figuring out how to take a lump sum and make it last for the rest of your life. Have a plan for how funds are invested and how you will withdraw them in retirement. While the rule of thumb says to withdraw 4% per year, this is very general advice and may not apply to your specific situation. There may be other options for creating lifetime retirement income and strategically drawing down assets over your lifetime.
3. How Can I Minimize Taxes on my Retirement Income?
Taxes could be one of your biggest expenses in retirement. We could see increased taxes in the near future and in the coming decades, and now is the time to prepare. Every part of a financial plan is connected, including an investment strategy and a tax minimization strategy. There could be several ways a financial advisor can help you with tax strategies. For example, you might consider a Roth conversion. In this case, you would pay tax on the amount converted now and then enjoy tax-free distributions later in retirement.
After the hustle and bustle of the holidays subside, it’s important to take some time to think it over. We can consider your financial situation and your lifestyle goals to help you feel secure in your decision. We can look at your portfolio and help you determine the right time to retire and how to do it. Schedule your no-cost, no-obligation financial review today to start the conversation.
The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax, or legal advisor with regard to your individual situation.
