Tips for Retirement Planning: Part 2
Published 1:19 pm Thursday, September 30, 2021
By Charlestien Harris
Last week, I talked about some very important steps you should consider to secure a stable financial plan for life during your retirement years. This blog is a continuation of those steps.
Estate planning is a step that is often overlooked when planning for retirement.. No one likes to think about death, but as you get closer to your retirement you’re also realistically getting closer to the end of your life. Being prepared with an estate plan will leave your family with a financial plan instead of financial burdens after you’re gone. It will also allow your money to be dispersed according to your desires.
I cannot stress enough the importance of creating a will, a healthcare directive or proxy as well as assigning someone you trust completely power of attorney to make life altering decisions should you become incapacitated. Let’s not forget to appoint beneficiaries on life insurance plans, retirement accounts and other assets. Remember, there may be tax implications with the IRS when financial gifts or real estate or other assets are distributed after death.
Another important tip to remember is if you have certain requests for your funeral or want certain family members to have specific items, you can create a document that expresses those wishes. It is wise to have that document notarized for authenticity and stored in a safe. It is a good idea to also store related personal information such as your social security number, birth certificate, bank account numbers, passwords, insurance policies and other important papers in a safe.
*Pro tip: Make sure someone you trust completely knows the location of your safe and how to unlock it, should you pass away.
Retirement income, mutual funds, government bonds, real estate, closed-end funds, dividend income funds and annuities are all good options for retirees. The more you know, the better you can decide which option is right for you. Most of us have spent our entire adult life investing money into our retirement accounts. It is vitally important to understand how to withdraw that money and how much you can withdraw without incurring a penalty.
If you have an employer-sponsored plan, figure out if you want to leave money there or roll it into an IRA account. If you are over 59 ½, you can take money out of your retirement account without incurring an early withdrawal penalty, but you will have to pay federal taxes on that money because it is considered to be taxable income.
You want your withdrawals to be tax efficient. Some states do not require their residents to pay taxes on retirement income, so make sure you check with your state department of revenue or state tax collection agency. By 70 1/2, the law requires you to take required minimum distributions (RMDs).
Next, you’ll have to decide when to sign up for Social Security. Most experts suggest you wait to sign up for social security until you reach full retirement age so you can receive full benefits. However, you can sign up anytime between the ages of 62 and 70. The longer you delay your request, the bigger your check will be. You can apply for Social Security online, by phone or in person at a local Social Security office.
After you’ve created your retirement plan, remember to review it at least every five years or whenever a life-changing event occurs. I know some of you might say, “I am too young to think about retirement” or “I just started working, so why should I rush my retirement planning?”The fact of the matter is—it’s never too early to plan for retirement. So just start wherever you are and continue to plan because that time will be here before you know it!
If you would like any additional information on this topic or other financial topics, please feel free to call me at 662-624-5776 or email me at Charlestien.email@example.com. Until next week, stay financially fit!