Retirement is a big step in everyone’s life, and one not to take lightly. Being financially prepared for retirement is crucial for a comfortable one because, due to today’s standard of living, your retirement could last about 20 years, if not longer. Relying on income from social security checks just isn’t feasible if your pre-retirement life costs more than $1,500 a month. Having a financial retirement plan set in place will help make sure that you live your life the way you want to once you’re out of the workforce without having to worry about your income. Why is that?
Money is stressful, and too much stress can lead to physical and mental health problems. Migraines, disrupted sleep, diabetes, heart disease, anxiety, and depression are all wellness issues that can emerge as a result of financial stress. By having a financial retirement plan, not only will you make sure your income is secure, but your overall health is as well.
Paying taxes is one of the major factors that could make or break your retirement. Fortunately, there are ways to reduce the amount of taxes you’ll need to pay before and after you’ve retired.
- Contribute to your employer’s 401(k) to lower your taxable income.
- Build a tax-free savings bucket with a Roth IRA, back-door Roth IRA, or Mega-Back Door Roth IRA.
- Find out if you qualify for Saver’s Credit if you’re a low-income earner to earn a tax credit between 10% and 50% of your retirement savings contributions.
- Find out how to reduce your state income tax.
- Ensure you have three sources of income and have control over their taxes. These are as follows: tax-deferred, tax-free, and tax-advantaged.
- Having multiple sources of income could save you thousands of dollars, depending on how the tax policy shifts and changes over the years.
Keep Your Money
One of the scariest possibilities of retirement is running out of money. No matter how well your portfolio looks, it can suddenly become redundant without proper planning, depending on how the market changes over time. By carefully planning out your retirement, you’ll be able to figure out your rate of return, the amount of risk you should take, and how much from your savings you can withdraw at any given time. A retirement financial planner can help significantly with this.