“Retirement is the only time in your life when time no longer equals money.”
Is that how you feel? You’ve no doubt spent many years working to make money to support yourself and your family and only now do you finally have the time to enjoy it. In fact, you’re probably wondering why you didn’t retire sooner!
But a few years into your retirement you might find that you didn’t budget accordingly for unplanned expenses, and you’ve already spent A LOT of your reserved money. You didn’t account for that medical procedure or the taxes on your retirement accounts and now you’ve outlived your savings.
Unfortunately, these scenarios are all too common and can be avoided entirely. If you don’t want to become a retirement horror story, we suggest the following tips:
1. Don’t rely on one source of income
Your pension and social security may not be enough to cover your expenses, especially if you retire early. We suggest looking into other forms of income, such as stocks and investments. Since you cannot predict the market and you’re not in a position to risk losing your savings, work with an advisor to create a distribution plan that will allow you to safely invest.
If you find yourself with a lot of extra time on your hands, you can also find a job that’s also a passion of yours. This will give you a little more wiggle room in terms of finances and give you a second chance at pursuing a hobby that you’ve always wanted to!
2. Have a tax strategy
Although you may no longer be working, many retirees forget that you still have to pay taxes. This may be difficult to estimate as not all of your money will be taxed the same way and some may not be taxed at all depending on the source.
Having a tax strategy will help you make choices that will minimize your tax liability. This process of determining where to take funds from and when to do so can be quite complex, especially when you have multiple sources of income as we suggested; so, working with a tax professional would be your best option.
3. Work with a pro
The answer is clear – working with a financial planner is the wisest course. Whether you’re currently retired, looking to retire, or are decades away from retiring, it’s always a good time to speak with a financial advisor to make sure you’re on the right track. To schedule your complimentary consultation, feel free to email firstname.lastname@example.org or call 203.698.7700. We look forward to hearing from you!