Countdown To Retirement

Author

Senior Tax Advisory Group

Posted on

Jan 25, 2023

Book/Edition

Colorado - Colorado Springs

Getting ready for retirement can be exciting. With such a huge lifestyle change, you should consider starting to lay the groundwork now. Here are some tips to help you through that transition.

Create a realistic budget.

When planning your retirement budget, remember that some expenses may decline in retirement, but your medical expenses will most likely go up as you age. Plus, be sure to include any long-term care expenses.

Set a firm retirement date.

You probably have an idea of when you’d like to retire, now could be a good time to set that date in stone. This is also a good time to talk to a Retirement Planning Specialist to help determine when you should claim Social Security to maximize your benefits and factor that into your planned retirement date.

 

Determine your retirement lifestyle.

In-depth research is a must no matter where you plan to live in retirement — whether it’s in another country or a nearby assisted-living community. Aside from obvious factors like the weather, you should also consider factors like state and local taxes, the local real estate market, proximity to friends and family, access to the kinds of activities you enjoy, and access to high-quality healthcare. If possible, take some of your saved vacation time and spend a couple of weeks living as you plan to in retirement.

 

Review your portfolio.

Soon you’ll be switching over from putting money into your retirement accounts to taking money out. If you haven’t already done so, you should rebalance your investments in preparation for retirement. For example, you may want to reduce the amount of risk. You may want to look at more income producing investments such as fixed indexed annuities, or income producing bonds. The number 1 concern in retirement is running out of money. This is also a good time to take your account statements to a financial professional who has experience in retirement planning and ask for guidance.


To learn more about Senior Tax Advisory Group call them at 719-596-4844. 

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Saving is the usual buzzword when it comes to planning for your post-work years. But accumulation leading up to retirement is only half the storyunderstanding how the funds will be dispersed is the other crucial, yet often overlooked, aspect of the planning process. While a recent Prudential study[1] notes that there are more people than ever before retiring and entering the distribution phase, their knowledge about this delicate period of managing investments and coordinating withdrawal strategies is often limited, and could be costly. When youre over the age of 50, you need more than a pie chart, you need a distribution plan says Darian Andreson, principal of Senior Tax Advisory Group, a financial planning firm located in Colorado Springs, Colorado. There are approximately 10,000 people retiring every day. Of these retirees polled, the number one concern consistently shared is that they fear running out of money in retirement. It seems there is too much emphasis today on the diversification of portfolios and pie charts, and not enough time and attention spent on how to coordinate and fund quality of life in retirement.  No one can control when the next major market correction will occur, but there are dozens of critical things that a retiree can control, which can result in hundreds of thousands of extra dollars in their pocket, giving them a far better opportunity to address the fear of running out of money.Since many of these retiring baby boomers will rely on social security as a good portion of their post-retirement income, understanding how the system works and how various decisions that will impact the amount of benefits received make it vital to get good information prior to distribution time. The revelation of Social Security is not so much about when you file, as much as it is about how you file, comments Andreson. When a plan is properly designed, we regularly see families receive a few hundred thousand extra dollars in Social Security benefits over a lifetime, in addition to tens of thousands of dollars in tax savings based on the tax favorable nature of these benefits becoming a larger part of their income distribution plan.In addition to designing a plan to maximize benefits, taxes are another important planning consideration. Although social security income is not taxable in and of itself, other income sources like withdrawals from 401ks or pension plans can cause our social security benefits to become taxable as high as 85%. 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There are no do-overs, so getting it right from the start makes all the difference, he says. And what exactly should a distribution plan consider? Of course, the most obvious consideration is ones planned age at retirement versus ones life expectancy. If an individual retires at 65 and lives until 90, his or her money has to last for 25 years. Its surprising how a simple thing like estimating life expectancy and the need to coordinate a plan to fund the needed after tax income is so rare in todays world of planning, Andreson remarks. Its likely because no one likes to think about mortality, but this is something that cant be avoided when talking distribution. 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Fork in the Road: Repair or Replace Your Vehicle

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