1. Don’t Count On Social Security Income Alone!
A mistake all too many make is assuming that SS income will be enough – it seldom is. You can expect SS to lay a foundation but not to build the whole superstructure, so to speak.
Taking your SS early at 62 is tempting, but remember that can reduce your total payments. It may be better to prepare alternative income sources that start paying out as early as age 60 and continue as long as you live.
2. Get A Pension If Possible
Most of today’s workers don’t really have a valuable pension plan as a viable option. If you do, consider yourself that much luckier and take advantage of it. Some pensions give you 30% to 50% of your average (or final) income during your working years – a huge boost to your monthly cash flow!
3. Understand Retirement Accounts
Also, consider investing in a 401(k) or IRA. These types of retirement accounts allow valuable tax deferral. You are taxed only when you take withdrawals, which should begin after age 59-1/2 in order to avoid a 10% federal penalty.
Ask a professional retirement consultant to explain the details of these accounts to you. For example, you don’t want to delay too long to start taking 401(k) payments because you must take regular withdrawals beginning at age 72 or face penalties (it used to be age 70 1/2 before a rule-change on December 19th, 2019).
And if you open a Roth IRA, which means you contribute post-tax dollars to it, you can withdraw income from it tax free assuming you are at least age 59-1/2 and the account has beet open for at least 5 years.
4. Choose The Right Investment Account
Aside from retirement accounts as such, it helps to diversify your portfolio with investment accounts like stocks, bonds, CDs, savings accounts, mutual funds, FIAs, and more.
Each one of these options has its own set of advantages and limitations, and they all have different “rules” by which they work. So be sure to get sound financial advice before investing.
5. Be Sure Your Health Expenses Are Covered
Overwhelming medical bills can especially be a risk for older people who may have major health problems in their retirement years.
Be sure you have a good health insurance policy, and don’t fail to take full advantage of Medicare when you qualify. Don’t let healthcare costs drain all your retirement income.
6. Consider Working During Retirement
It’s not for everybody, but many people enjoy having a part-time job during their later years. It keeps them busy and focused and gives them a sense of purpose. Plus, it bolsters your cash flow!
7. Reduce Debt & Expenses
One of the best ways to free up cash flow is to simply reduce unnecessary expenses and to eliminate debt. Owning your own house – no more mortgage to pay on!, can be a big help. Getting out of debt before you retire is a huge help, and with the right planning, it can be done.
For more helpful advice on how to prepare financially for retirement, contact the experts at BD Financial Concepts today for a free consultation.