Posted on: 8 May 2017
Thinking of retirement can lead to both pleasant and fearful thoughts. While you may be able to sleep-in and take up new hobbies, you might wonder if you will be able to support yourself without the same earning power as you have today. Starting to plan for your retirement now can help you feel confident and comfortable with your future life, but it's important to consider the following pointers.
To do retirement planning in a way that doesn't make you overwhelmed, it's important to keep your goals and motivations clearly defined. There are so many possibilities and decisions that could be made about your future life; without clear goals for your future, it's easier to financial decisions you'll regret. Do you hope to travel the world? Do you just want to be able to afford your home taxes and food? Being as specific as possible about what you want your retirement to look like can better guide your actions.
Keep in mind that obsessively tracking your current expenses to determine what you'll need later in life may not be the best idea, as costs are likely to rise across the board and you might develop health issues that increase your monetary needs exponentially. Help from a professional can give you a realistic idea of how much money you are likely to need for the lifestyle you want.
Invest for Passive Income
If you are currently only investing in markets through your work-related retirement account, now is the time to start thinking about mutual funds, bonds and stocks. By investing some money regularly, you can start to accumulate financial returns that will give you a nest egg without strenuous effort or more hours worked on your part.
The type of investments you make are generally determined by the goals you've set. For instance, if you don't plan to need much money and aren't retiring for many years, bonds might work well. If you're retiring in the next few years and are hoping to take care of some health issues, you might think about being more aggressive with your investments and picking up individual stocks. A financial services professional can help make those decisions.
Reduce Tax Burden
Once you've discovered new ways to bring money into your life, you'll need to remember your tax burden. Luckily, there are many options that could help you reduce your taxes in a way that will enable you to keep more of the money you're hoping to save for your senior years. You can open additional retirement accounts, such as the Roth IRA, for example, that permit tax-free withdrawals past a certain age; withdrawing money from stocks and other investments will typically mean you'll end up paying more in taxes because of capital gains. Charitable giving may also lower overall tax responsibility.
Of course, tax legislation is always changing; checking with a financial planner every so often may provide you with new or slightly different choices.
Once you're able to start looking into the issues detailed here, spend time speaking with a local financial services professional. They can guide your investments and other decisions so that you're able to retire in comfort.Share