Will you be leaving money on the table after you retire? The answer is probably a resounding YES. (Whether you realize it or not.) And that’s too bad. You want and need all the money you can raise to fund a secure future. Therefore, it is important to take advantage of every opportunity to spend your money wisely.
Surprisingly, many retirees or soon-to-be retirees overlook the fact that they could potentially have hundreds or even thousands of dollars, or even hundreds of thousands of dollars, in their retirement savings.
Here are seven tips to avoid falling into the typical traps that lead to retirement downfall.
1. Make good decisions about social security
There’s no necessarily right or wrong way to claim Social Security.
However, it is important to understand how this program was designed to help older adults. Although Social Security only replaces about 40% of a worker’s retirement wages, according to the Social Security Administration, nearly half of married people and 71% of single people rely on their monthly Social Security income. It is said that at least half of the company’s income is spent on it. Income, according to the Social Security Administration.
A mistake many people make is to become eligible and immediately collect their full Social Security benefits at age 62, regardless of whether they are still working or not. By claiming Social Security as soon as possible, many people end up leaving a lot of money behind because the benefits get bigger the longer you wait.
To see how much of a difference this makes, consider that for every year you pass full retirement age to collect Social Security, your benefits increase by about 8% until age 70. And claims at age 70 can be huge.
You could be leaving up to $100,000 or more on the table.
If you want to know when is the best time to start benefits, try using Boldin’s Social Security Explorer in the Boldin Retirement Planner. And here are some simple tips to help couples receive the best Social Security benefits.
2. Relax some of your investments.
Another reason older Americans leave money behind in retirement is because they don’t take enough risk with their investments. Investing all your retirement funds too conservatively can be harmful in the long run. It makes sense to be more conservative in retirement, but there is still a level of risk you can maintain.
You may be afraid of volatility and avoid the stock market in favor of investing in CDs or government bonds. However, if you limit your investments and take an overly conservative approach, you can miss out on big profits.
A good strategy is to maintain a well-diversified investment mix. Consider different investment types: risky, rock-solid safe, and everything in between. The exact proportion of each type of financial product should be determined based on your assets and goals. And focus on index funds rather than individual stocks.
Another more strategic option is to apply a bucket investing strategy. for example:
- Invest funds sparingly for short-term needs. And be more proactive about spending money that you won’t need until later.
- Alternatively, you can divide up the money you need for retirement and invest it sparingly, leaving the money you want to spend on investments that have the potential for higher returns.
And if you’re concerned about stock market volatility, consider ways to protect your money from stock market crashes.
3. Don’t forget your previous employer’s 401ks
Anne Ing Direct USA investigation We found that 50% of Americans who participated in a 401k plan retained their previous employer’s account. If that doesn’t leave any money on the table, I don’t know what does. And it’s not chump change that’s being left behind. Nearly a quarter of orphaned accounts are worth between $10,000 and $50,000.
Also, if you leave your previous employer’s account, it’s unlikely that they’re monitoring and managing your account to maximize growth.
Rolling over your account is almost always a good idea as long as you carefully follow the rollover guidelines.
4. Be careful with drawers
In retirement, many Americans are withdrawing funds from their savings and saying goodbye to large sums of money. Because most people don’t have a formal withdrawal plan.
Many retirement savings accounts have taxes involved, so it’s important to be aware of the type of account you’re drawing from and the taxes involved.
Yes, some withdrawals are not taxed in some accounts, so it’s important to be aware of the differences between accounts beforehand. A plan should be developed in line with your retirement budget, ideally before you retire. If you’re already retired, start planning as soon as possible.
Tax implications also vary by state. For example, 13 states in the United States tax Social Security benefits. Therefore, find out as much as you can about each state’s laws regarding taxation of retirement funds and the tax implications for all retirement savings accounts.
Boldin Retirement Planner allows you to easily compare your retirement income and retirement expenses and see when you need to take a withdrawal. It also automatically retrieves the required minimum distributions. Use this analysis and detailed tax charts to make better financial decisions and be smart about where and when to spend your money.
Or, start by learning more about how to manage your retirement withdrawals to reduce taxes and maximize income.
5. Think about taxes
You may not care much about how much tax you will have to pay in retirement. But not taking the time to consider how retirement taxes will affect you can be a mistake, and you could be missing out on an opportunity to get more for your money.
Here are 15+ ways to save on taxes in retirement. You can also use the Boldin Retirement Planner to see your tax liability in retirement and adjust your finances to minimize your tax expenses.
6. Pay off your debt before you retire
Before you retire, your goal is to accumulate resources that will last you after you quit your job.
After retirement, you have a relatively fixed reserve to make ends meet. If you’re still paying off your debt, the interest you pay is money wasted, especially if the interest rate you’re paying is higher than the interest rate you’d earn if you saved or invested your money.
Use the Boldin Retirement Planner to see what happens if you pay off your debt earlier or later than planned.
33% of all Planner users make a decision to improve the strength of their retirement planning the first time they use the tool.
7. Consider your home equity
When people calculate their retirement assets, they usually think about savings and income. However, if you own your home, your home equity may be your most valuable asset overall.
This money can be used to fund your retirement by downsizing, taking out a reverse mortgage, or even renting out your room. Your home is a valuable resource that should be considered as part of your overall retirement planning.
Depending on its value, your available assets could easily increase by hundreds of thousands of dollars.
After entering some initial data, Boldin Retirement Planner lets you experiment with different ways to release home equity so you can see how these decisions shape your overall financial picture. You can check.
Take money off the table and use it to live the life you want
Whether you want to increase your income for travel and hobbies, or simply enjoy some peace of mind, maximizing your financial potential can help you live your retirement the way you want. Make the most of your money and time with the Boldin Retirement Planner.
