For most people, retirement is a one-way trip. Once you start, there is no going back, wishing you had planned differently or thinking you should have saved more for it. Many retirees regret not doing what they should have done when they were younger but cannot do much about it once taking that step.
Much can be learned about the right way to retire from retirees and professional financial advisors who will make you glad you followed their advice. Here are some retirement tips you need to know to ensure a more comfortable retirement.
1. Start Saving Early for Retirement
The power of compound interest can be seen when you start putting money into retirement accounts early. It can mean hundreds of thousands of dollars more if you start early, which will give you a much better retirement. Although there may be some years when the market does not perform well, you will see considerable growth over time.Even if you start saving small amounts, save consistently. Put it into your employer’s retirement account—if they offer one. Once the money is in the account, do not touch it until you retire—you will be glad you did.
2. Claim the Maximum Amount of an Employer’s Matching Contributions
If your employer offers matching funds, contribute enough to get the maximum amount. It will enable your retirement account to grow much faster. Use automatic deductions and increase them anytime you get a raise.Once you turn 50, you can make catch-up contributions annually to your retirement accounts. If you have an individual retirement account (IRA), you can contribute up to $8,000 in 2024. If you have a 401(k), you can contribute up to $30,500.
3. Know What You Will Need in Retirement
Even if you have some time before you retire, you need to have a good estimate of what you will need each year after you retire. The Department of Labor advises you to have 70–90 percent of your income in retirement savings.If you intend to retire when you reach 65, you should have enough to last for an average of 15 years. You may live longer than that, but it is unpredictable. Remember that Social Security, or a pension, should be included in your calculations, which enables you to require less money once you retire. You can get a good idea of how much you need to save by using Ameriprise’s retirement calculator.
4. Delay Taking Social Security
Social Security is available to any worker who has worked enough hours to qualify. Even though you can start getting Social Security benefits after you turn 62, you will lose a lot of money each month if you take it then. The benefits increase monthly and reach the maximum amount when you turn 70.Social Security has an annual cost-of-living adjustment (COLA) based on the previous year’s inflation rate. The longer you wait to claim the benefits, the more you will receive each month. Your spouse’s Social Security benefits depend on how old you are when you start getting the benefits.
5. Take Advantage of Tax-Efficient Withdrawal Strategies
If you have multiple retirement accounts, you want to plan on how you can take withdrawals in a most tax-advantaged manner. NewYorkLife advises talking to a financial adviser to learn the best way to withdraw money from your various accounts and when to make changes to your portfolio to keep the most money in your pocket.6. Lower Your Taxes in Retirement With Roth Accounts
Put some of your retirement money into Roth accounts—a Roth IRA or a Roth 401(k). You must pay taxes on any money rolled over, but your withdrawals will be tax-free. Doing so enables you to pay less taxes, or you can pass the money in a Roth account on to your beneficiaries since there are no required minimum withdrawals.7. Prepare for Healthcare Needs
As you and your spouse grow older, your healthcare needs will increase. It will take a sizable chunk of your retirement funds to meet those costs. Fidelity says the average couple will need as much as $315,000 after they turn 65 for healthcare costs.
Healthcare costs continue to rise rapidly. The above estimate was made in 2022, but is likely higher now. Also, remember that Medicare does not pay for long-term care.
8. Create an Emergency Savings Account
Put two to three months’ worth of expenses into an account that is easily accessible. By doing so, you will not need to put unexpected expenses on a credit card, take out a loan, or dip into a retirement savings account. You never know when unexpected events will occur, such as medical emergencies, job loss, injuries that temporarily put you out of work, etc.9. Do Not Retire During a Bear Market
FinanceStrategists advises avoiding retiring during a bear market to prevent a sequence of returns risk, which can significantly reduce your retirement money. You can take steps to reduce the risk by changing your rate of withdrawal and diversifying your portfolio.Because retirement is often a permanent situation, you need to prepare for it. While many seniors hope to keep working until they reach 70 or more, not everyone will have the privilege. Get advice from a certified financial planner to ensure your retirement planning enables you to be prepared for it.
The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
