Retirement planning is one of the most important financial endeavors that you will undertake. If you do it right, you will spend your golden years filled with joy, freedom and independence, and it helps to begin this journey at an early age. Today, we’re talking about common pitfalls when planning your retirement and how to steer clear of them, so that you can retire worry-free and with ease.
Not Saving Enough
It’s often difficult to hear that you need to be saving more. The truth of the matter is, you are either saving for your retirement today or you are consuming your retirement today. Since many Americans either do not save enough or they have their money in risky assets, this is a common pitfall in today’s society. In order to save more for retirement, consider the following:
• Limiting expenses
• Sticking to a budget
• Proper tax planning
Underestimating Your Expenses
One of the common mistakes that most people make is underestimating their expenses in retirement. It is important that you maximize the results and in order to accomplish this, you need accuracy. You can start by making a spreadsheet to track your expenses, monthly and yearly. Calculate the increase and based on your calculations, you can make projections for the next five to 20 years.
Most people believe that when they retire, their portfolio should only have safe income generating investments. The truth of the matter is that they should have growth oriented investments, so that they can maintain their purchasing power. Therefore, they should also be concerned about growth of their investment keeping up with the country’s inflation. The portfolio should address your risk tolerance as well as the time horizon.
Underestimating Your Healthcare Costs
When planning for your retirement, this area is often overlooked. When people have medical insurance, they will overlook the fact that the premium will increase from year to year. They also do not consider ailments that are not covered by the policy that can dig a hole in your savings in old age. Carefully planning for healthcare costs helps you avoid unplanned expenses after retirement.
Not Planning for Taxes
Apart from planning for your medical costs, you need to plan for your taxes. Just because you are retired does not mean you will not need to pay your taxes. The IRS does not retire with you. With sound planning before retirement you can minimize your tax obligations, and there are plans available that allow you to make after tax contributions today, but withdraw the funds later tax free.
Getting the help of a professional accountant can be beneficial, since they will assist you in implementing the best plan for your future. Contact our experts at Bodine Perry to ensure that your retirement is filled with enjoyment and relaxation, not stress and worry. Call (855) 851-8318 or visit www.bodineperry.com.