Life is full of unexpected events. That’s as true in retirement as it is during any other time in your life. Some of these surprises can be pleasant, like connecting with an old friend or discovering a new passion. Some can be not so pleasant, like facing a costly home repair or a serious medical issue. And unpleasant surprises in retirement can sometimes put your savings at risk.
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Annuities are an often misunderstood financial tool. Many people assume that annuities are too complex to understand, or they may believe annuities are too costly. The truth is that annuities can be helpful financial tools when used appropriately. Without the right information, however, it can be difficult to decide whether an annuity is right for you.
For many Americans, retirement is the ultimate financial goal. Retirement is often associated with freedom. You’re free from the schedule and lifestyle constraints that come with a busy career. When you’re retired, you’re free to spend your time as you like, on the things, people, and activities that mean the most to you.
Unfortunately, many people don’t get the chance to experience that kind of freedom until late in life. In some cases, they may not be healthy by the time they retire and their most active years could be in the rearview mirror. Every year since 2001, Gallup has conducted a survey to measure Americans’ top financial worries. Medical bills, cost of living, and investment volatility are commonly cited by respondents as significant concerns.
However, the study has delivered the same number one financial worry for sixteen consecutive years. It’s the concern that one won’t be able to afford retirement. In the 2016 study, 64 percent of Americans said their primary financial concern is that they won’t have enough money to retire comfortably.1 A new year is here, and if you’re like many Americans, that means it’s time to make resolutions to improve your life. Perhaps you want to lose weight or drop an unhealthy habit. Maybe you’ve resolved to finally get organized. Or you could make 2017 the year you take back control of your financial future.
Many resolutions are simply a promise to one’s self to build more productive habits. Losing weight is about getting in the habit of exercising regularly and eating healthy. Quitting smoking or some other unwanted behavior is all about developing the habit of self-control. The Roth IRA is a popular investment vehicle with many appealing features. For instance, you can grow your assets on a tax-deferred basis and take tax-free distributions after the age of 59½.
Further, as opposed to a traditional IRA, a Roth doesn’t require minimum distributions at age 70½. Another advantage is that you can use your Roth to leave a tax-free benefit to your loved ones. With a Roth, after you pass away, your beneficiaries can receive the assets tax- and probate-free. If you’re approaching retirement, you’re likely facing a number of big decisions. Do you stay in your current home or downsize? How do you allocate your investments to minimize risk but also generate income? What are your plans to pay for medical expenses and long-term care?
Retirement is a major life transition, so it comes with a wide range of big decisions. One of the most important decisions you may make is when to file for Social Security. Many retirees want to file as soon as they’re eligible. That feeling is understandable. After all, you’ve been paying into the system for decades, and now you want to see your share of the benefits. Most of the time it makes sense to maximize the contributions to your retirement accounts like 401(k)s or individual retirement accounts. In the broad sense, this is good advice and good practice. Not only does it allow you to save for retirement but it may also reduce your taxes.
Career changes are busy times with many things to consider. With so much changing in your life, thinking about your retirement plan may not take top priority. But as you switch jobs there are several things to consider to ensure you are still saving for your retirement. It’s the perfect time to re-evaluate your retirement plan and look at possibly adjusting the way you save.
If you’re in the middle of switching jobs, take some time to ask yourself these questions: Thinking about an exotic paradise for your retirement? Retiring in a foreign country can be fun, exciting and the perfect way to spend your golden years. But before you start packing your bags, there are a few things you should consider.
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Kirt CarstensCarstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future. Archives
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