Realistic Retirement Calculations
Retirement planning involves two core tasks: estimating how much money will be needed and identifying where it will come from. Surveys show that most workers have been unable to do this very accurately, and that they actually spend more and have less income in retirement than they expected. For example, only 13 percent of workers expect Social Security to be their largest source of income in retirement. In fact, 44 percent of retirees said Social Security is their largest source of income.
Get quick answers to your annuity questions: Call 800-872-6684 (9-5 EST)
Practical Financial Steps to Retirement
Whether you are approaching retirement or already retired, you may want to consider some of these steps to help reduce any gaps between your expectations and reality.
Take Advantage of Tax Deferral
Pre-Retirees: Federal law allows people aged 50 and older to make increased contributions to tax-advantaged vehicles such as IRAs and 401(k) plans. Distributions from tax-deferred plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10 percent federal income tax penalty.
Retirees: By taking withdrawals from taxable accounts in the early years of retirement and leaving money in tax-deferred plans as long as possible, you may be able to increase the benefits of tax deferral.
Hone Your Expectations
Pre-Retirees: Four out of 10 retirees left the workforce earlier than they had planned, with half citing medical problems or disability as the cause. You might want to prepare for the possibility that you could be forced to retire earlier than planned, or that medical expenses may be higher than expected.
Retirees: Out-of-pocket health-care expenses for seniors rose 50 percent between 1999 and 2001. Further increases are expected as more employers eliminate retiree health benefits. Plan to review your financial situation each year to adjust for unexpected expenses or any additional income.
Stick to the Plan
We wanted to establish a bit of extra income. There was a good recommendation about ImmediateAnnuities.com on CNN. We also liked that we could see excellent reviews about them on Google. They were very thorough from our first inquiry to when we decided to buy our annuity from Mass Mutual. They always answered our questions promptly and followed up with the insurance company, too. We have been receiving our monthly payments since last November and couldn’t be happier. What more can we say?
Pre-Retirees: Creating and implementing a sound financial program is important, but it’s only half of the equation. By adhering to predetermined investment strategies, investors may be better able to weather periods of market volatility and economic uncertainty.
Retirees: The need for a solid financial plan does not end when you stop working. Stretching money out over a long retirement may require increased attention to investment performance and asset allocation.
Observe these suggestions for a serene retirement
Even the most detailed retirement plans can change with circumstances. By staying flexible and preparing for the unexpected, you may be able to handle almost any situation that may arise.