The majority of individuals retire before they die. Will the funds be available to do so with ease? This is the question on the minds of many. Men and women looking to retire in the near future need to make changes to their financial plan to account for this major life change. Following are five things to consider as you make this move.
Avoid Taxes
Work with a financial planning company, such as Commerce Trust Company, to minimize taxes during your retirement years. With the right plan in place, individuals and couples may find they are able to eliminate their tax burden completely. It’s all a matter of knowing where to put one’s funds to accomplish this goal while ensuring there is enough money available to live comfortably on. For example, sell long-term holdings in those years where capital gains won’t be a concern and hold on to them in the years where this would become an issue.
Take Health Into Consideration
Individuals who dream of retiring early often find they need more funds to accomplish the goals they have set out for themselves. They are in better health and can do more when they are younger. Don’t overlook this crucial factor if you wish to stop working early. You want to ensure the funds are available for those things you have put off doing until you retire.
Plan for Social Security Carefully
Although a person may currently begin drawing their social security at 62, doing so isn’t always a wise move. The longer one delays in taking these funds, the larger his or her monthly check will be. The benefit actually increases anywhere from seven to eight percent for each year that you delay taking the money. However, once a person reaches the age of 70, the monthly check amount no longer continues to grow. Plan accordingly and try to delay accepting the benefits as long as possible for a larger check each month.
Create an Emergency Fund
Individuals often place their savings into various investments in preparation for retirement. However, as the retirement age nears, it’s best to move some of these funds to a rainy day or emergency account. Doing so makes it easier to access them if they are needed. Furthermore, while the funds won’t be earning as much money while sitting in a savings account, they are less at risk. This becomes of more importance the closer one gets to retirement age.
Consider Downsizing
While many people don’t want to leave the home they have lived in for a number of years, especially those who have raised children in the home, doing so may be a wise move. Housing expenses take up a large percentage of one’s retirement funds. Even when the house is paid off, it must still be maintained, which can be costly. Consider moving to something smaller, save money each month, and pay less in taxes and upkeep. These funds can be used for more enjoyable activities in your senior years.
These are only a few of countless things a person should consider doing as they near retirement age. The key is to find those measures that are most appropriate for your unique situation. If you find you need help in determining where changes should be made, don’t hesitate to seek professional help. For instance, if you haven’t planned your estate yet, seeking the help of a living trust attorney that offers trust drafting services should be on your list. You should be able to enjoy your senior years without worry about your finances. The right plan can ensure this is exactly what happens.
