Retirement planning encompasses a wide range of consumers and advocates, from those who have no idea what to do to those who will suggest anything, no matter how unrealistic, to all but a narrow niche of consumers.
Your plan, then, should be built on the middle ground, with reliance on no single product or tactic. Rather it should consist of a mix of proven, safe and thoughtful approaches that will generate enough income to ensure you never run out of money.
There are plenty of ideas to choose from. GoBankingRates.com, a website that tracks interest rates recently published an article listing 25 ideas for retirees to consider. I focused on those addressing retirement finances, and I liked three of them enough to highlight here – followed by another three of my own ideas that everyone should consider.
Keep taxable income low
Some retirees are surprised to learn that their Social Security benefits will be taxed, and sometimes it affects what kind of lifestyles they can afford. There are ways to limit your tax bill, including saving money in a Roth IRA. Unlike a traditional IRA or a 401(k), Roth money is taxed before you contribute it, not when you take it out to spend. I wrote here about other ways to trim your tax bill.
Rent instead of own
Renting an apartment or house means someone else worries about maintenance, property taxes and insurance. I examined how women especially might consider whether to rent or own during retirement.
Save for retirement over college
More Boomers are having children later in life and find themselves saving for both college and retirement – or trying to figure out which to put off. I agree that everyone should save for retirement first and then determine how to pay for the kids’ college. Here is my advice.
The GoBankingRates article goes on to discuss how to travel the world for free and other ideas that might fit into some, but not all, retirement plans.
My additions to the list are practical solutions that everyone should consider. This combination of strategic approaches and tactics will help you create a retirement that fits your needs and allows you the greatest financial freedom possible.
Practical retirement solutions
Create real income
Think about your retirement plan in terms of creating income rather than accumulating savings. Social Security will provide one source of guaranteed lifetime income. You will be better off when you find one or two more sources. Income annuities are often the best way to do that as part of your overall mix of assets.
A two-stage retirement
People who retire today can reasonably expect that they might live another 30 years or more. Your circumstances during that span of time will change.
In the first stage of retirement, you probably will be very active doing things you didn’t have time for before. In the second stage, however, you might be dealing with costs of health care, a home aide or other expenses.
You can prepare for a two-stage retirement before you retire.
Do your homework
Gone are the days when you could hand your bank account over to your accountant and financial advisor and let them do the work. To break down the silos that exist in the financial industry — which prevent advisors from considering every type of strategy or product that might benefit you – you must do your own research. A relatively short amount of time spent in front of your computer and asking questions face-to-face will prove to be very valuable.
With a little time and effort, you can prepare yourself for retirement based on good decisions that you fully understand and that will give you the confidence to enjoy the years after you leave the workforce.
Jerry has spent four decades advising and creating products that benefit retirees. Visit Go2Income for information and answers about annuities or go to Ask Jerry, where he will answer your specific questions.