For Mark Roberts’ Use: Retirement sure isn’t what it used to be. Previous generations often accessed retirement income through a pension offered by their employers. The pension, along with Social Security benefits and any personal savings, provided enough funds to sustain a retirement that lasted a decade or so. But now, lifespans are increasing and pensions are disappearing, making retirement planning a tricky process. You’ll have to fund your own retirement through careful saving and investing, and you’ll need to make that money last for twenty or thirty years!
It sounds daunting, but it is still possible to plan for a secure retirement. Just consult with us regularly, and consider the following five steps to help create a retirement fund that lasts for the length of your retirement years.
Help your money grow. It’s not necessary, or even advised, to take on excessive risks. But some amount of risk is necessary in order to grow your retirement funds. Work closely with us to identify your risk tolerance, and remember to reassess that tolerance every few years. Risk is often more acceptable earlier in your career, and towards retirement we begin to tighten up and protect principle.
Make catch-up contributions. It’s best to begin saving for retirement at the beginning of your career, in your twenties. But realistically, how many of us actually did that? If you’ve fallen behind, you can still catch up by making extra contributions in your fifties and sixties. Once you reach age 50, you can make catch-up contributions to your retirement plan, on top of your regular contributions. This year, the limits are $18,000 in regular contributions and $6,000 for additional catch-up contributions for those age 50 and older.
Postpone retirement. As your expected retirement date draws closer, you might become concerned about whether your funds will really sustain you for another twenty years or so. It’s okay to delay your retirement. In fact, for each year that you delay claiming Social Security benefits, those benefits will grow. Plus, you can continue paying down debts and stashing money in your 401(k) or IRA.
Identify additional opportunities to save. If you’re maxing out your 401(k) contributions each year, you can save more money in other vehicles. An IRA is one option, or you could purchase an annuity. If you save money in a qualified health savings account, you can continue rolling over unused funds each year and then use them to cover healthcare expenses in retirement.
Don’t try to make any big decisions without first seeking expert advice. Give us a call, and we can help you decide upon ways to better prepare yourself for retirement, and offer advice on how to make your money last as long as you do.