Retirement Income Planning Guide
Retirement income planning will help you make the most of your post-career lifestyle. But how much do you need to retire comfortably? And what will it take to get there at your preferred retirement age?
These are the questions that all Americans face as they get closer to the end of their respective careers. Unfortunately, some people will be too far behind to retire on their own terms. Let’s break down what it will take to ensure that doesn’t happen to you.
Retirement Income Planning Goals and Strategy
For most Americans, it all begins early in their careers with one simple goal: save as much money as possible. And this is a great foundation to build from – even more so if you begin saving in your early 20s by signing up for a 401(k) or Roth IRA.
However, it’s easy to become complacent in your saving efforts if you don’t remain vigilant over time. And as you get older, it’s important that your retirement income planning evolves with you.
As you age, you need to look beyond saving. It becomes a matter of protecting your savings and developing a strategy that covers specific goals and needs.
What do you want your retirement to look like? Where do you want to live? Do you want to travel or spend more time with family? Maybe you want to upgrade to something bigger or downgrade to something smaller. Or would you like to relocate to another state or country?
These are reasonable questions. In fact, more than 17% of Americans move once they retire. And another 30% either move later into their retirement or move frequently during this stage of life.
But to make any of this happen, you need to have the money to do it. And that is where your retirement income planning can make all the difference.
Best Retirement Income Strategies
This is where retirees tend to branch off from each other. Everyone is different. And that is clear when you look at the many ways retirees use retirement funds and build passive income.
In general, there are a few strategies that are more popular than others. The most common retirement income strategies include…
- Minimizing tax hits
- Maximizing Social Security benefits
- Implementing withdrawal strategies
- Investing in real estate
- Investing in the stock market.
Retirement income planning requires a consistent effort to make the most of your money. In addition, Americans are living longer than ever before.
That is why retirees are finding new ways to minimize their taxes and take advantage of their benefits structures. They’re also using the stock market and capitalizing on real estate swings to generate passive income.
Social Security, Taxes and Savings
The landscape of Social Security is changing. And your maximum benefits will depend on when you were born. Due to the Social Security Amendments of 1983 passed by Congress, you may be able to receive full benefits between the ages of 65 and 67. This depends on your birth year.
If you were born any time after 1960, you won’t receive full benefits until the age of 67. And it’s usually best to wait to retire until you can receive the maximum benefit.
Retirement income planning is that much more difficult if you retire early. Saving money is great, but it is important to understand where you are saving that money and how it is taxed.
Your safest bet is investing in a 401(k) or Roth IRA. Each has its own set of benefits for retirees. For instance, a Roth IRA carries no required minimum distribution. Therefore, your money can grow throughout your entire life and you can wait to begin withdrawing the money until it becomes necessary.
This is why many Americans convert their traditional IRAs and 401(k)s into Roth IRAs. Any withdrawals you make after the age of 59 1/2 will be tax free as long as the account has been open for at least five years.
Investing is the best way to generate passive income. And the stock market is the most popular investment strategy for retirees. Historically, the average stock market return is 8% to 10% annually.
But real estate can be another form of passive income in retirement. Do you have an extra room, home or vacation property? If so, don’t be afraid to rent these out and beef up your wallet in the process.
You can make the most of your retirement with the expert advice of Wealthy Retirement. Sign up for the FREE e-letter below to have access to daily retirement trends and strategies.
The Wealthy Retirement team has decades of experience helping individuals like you as you prepare for this important stage of life. Your retirement income planning goals will open a path to financial freedom well after your professional days are over.
About Corey Mann
Corey Mann is the Content Manager of Investment U. He has more than 10 years of experience as a journalist and content creator. Since 2012, Corey’s work has been featured in major publications such as The Virginian-Pilot, The Washington Post, CNN, MSNBC and more. When Corey isn’t focusing on Investment U, he enjoys traveling with his wife, going to Yankees games and spending time with his family.