8 things every person approaching retirement should consider
Posted on September 15, 2018
At Teipen Selanders Poynter & Ayres, we realize that the ‘how and when’ of retirement planning is an amazingly complicated topic since there are so many variables.
Some people have all the resources they need, while others struggle to pay for the basics. The age range of retirement varies significantly. Some workers might leave their job at 55, while others need to work until age 75 or later. To add still more variability, some retirees can reasonably expect to live into their 90s, while others may be lucky to reach age 65.
Still, with all those differences, there are a number of issues common to all of us. Here are 8 considerations from the partners at Teipen Selanders Poynter & Ayres to help you plan your retirement:
- An important consideration is to understand that once you retire, it’s hard to go back. Your work skills quickly become dated and hiring managers frequently discriminate against older workers. So — plan ahead — carefully.
- You can begin to receive Social Security benefits anytime after age 62. That said, most financial experts recommend waiting as long as possible since your monthly payment will continue to grow with every year you wait to withdraw.
- You can start to withdraw from your IRA or 401(k) at age 59 1/2 without penalty. However, again — the longer you let these investments grow, the more you’ll have to spend in the long run.
- Retirement accounts have enjoyed growth over the last 10 years as the stock market has more than doubled since the last recession. Check your balances. Now may be time to pare down in case there’s an economic downturn in the near future.
- Don’t forget about taxes. Even if you earn a relatively modest retirement income – over $25,000 for individuals and $32,000 for couples – the IRS will tax part of your benefit. You will likely have to pay income taxes on IRA and 401(k) withdrawals, too.
- When it comes to retirement spending, a good rule of thumb is to keep spending to 4 percent of your savings each year. But the key to spending assets is staying on top of them. You might be able to spend a little more than 4 percent if your accounts are growing, but less if they’re stagnant.
- Figuring out how all this is going to work takes time, research and expertise. Your CPA can help with projections and/or a portfolio analysis.
- Want to do some independent research? Here are some on line resources from IRS.gov you may also wish to consider:
- Individual Retirement Arrangement FAQs – Withdrawals
- Publication 915, Social Security and Equivalent Railroad Retirement Benefits
- Publication 575, Pension and Annuity Income
- Publication 590-B, Distributions from Individual Retirement Arrangements
- Retirement Topics: Required Minimum Distributions
- Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits
- Retirement Savings Contributions Credit (Saver’s Credit)
There’s a lot to consider when thinking about your retirement. If you have questions, let’s talk. We have a lot of information and resources to share to help you make the best decisions possible.