Retirement is swiftly approaching. You’ve been saving and investing most of your life for this moment, but now you’re not so sure you’re ready to retire. It’s a predicament faced by many people. While retirement has many financial and non-financial components to it, here are some initial questions to ask yourself to help you get started.
1) How much income will you need? Don’t make the mistake of assuming your expenses. You don’t want to discover that you’ve underestimated your income needs several months into retirement. Start by tracking your actual expenses over a few months and then make any adjustments you foresee to your lifestyle (relocating, downsizing, etc.) to create a retirement budget.
2) What will you be receiving from Social Security? There are over 1,000,000 choices and combinations for choosing Social Security benefits. A Social Security professional should be consulted for this part of your planning.
3) What other income will you be receiving? If you’re fortunate enough to qualify for a pension, get a pension estimate. Include rental income from any real estate you own. Be hesitant about including income from a part-time job or business since you don’t know how long that income will last, or how it could affect your Social Security benefits.
4) How much can you safely withdraw from your retirement savings? Add up all your retirement savings, including retirement plans from previous jobs, your current employer’s plan, IRAs, and any other investment accounts intended for retirement. Then multiply that total by 4% (which has been found to be the historical safe inflation-adjusted withdrawal rate from a diversified portfolio over time.)
5) How much will you owe in taxes? Taxes are different for everyone and will vary based on your income sources and what state you retire in. And based on the past, they will continue to increase!
At Maximum Wealth we work with individuals and small businesses to help them prepare, plan, and implement all aspects of retirement including a casual conversation about how to get started. Contact us today to get a “Head Start!”
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