Avoid Retirement Mistakes That Could Cost You Thousands Of Dollars

If you are in or near retirement, are about to change employment, or have recently left an employer, you may want to see if a rollover or transferring your retirement plan(s) would benefit you. It’s very important to be aware that IRAs and employer pension plans, like 401(k)s and 403(b)s, have their own distinct distribution rules. After years of contributing to a retirement plan, many people still don’t understand the rules, tax consequences, or options available to them until it’s too late. Use the latest IRS rules and tax strategies to help avoid common, often costly, mistakes. Without proper planning, rolling over or transferring retirement accounts could end up costing you and your heirs excessive penalties or unnecessary taxes. You should consult with a financial professional who will provide reliable information, someone who knows the rules and best ways to handle the distribution of your assets.

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The goal is to be educated and able to make informed decisions.

Getting a second opinion can help you obtain valuable information on rules and regulations, so you are more aware of your options. At the same time, understand how to avoid common mistakes and pitfalls. The goal is to be educated and able to make informed decisions. Make sure all your concerns and questions are addressed, so you have a good understanding of your retirement assets, along with specific recommendations and a plan of action. If you are fortunate enough to have a pension, you may have the option of receiving it in regular payments or a lump sum; you should find out which would benefit you more in your specific situation – the difference could be thousands of dollars over your life expectancy.

Regarding Social Security, should you file now or later? And what strategies should you use? When you’re in or near retirement, and you want to start withdrawing money, from which bucket should you draw to fund your retirement? Social Security, retirement accounts, Roth IRAs, or capital gains and dividends can be taxed differently. Use the IRS rules to put more money in your pocket, not theirs.

If you’re thinking about retiring or are already retired, you should have accumulated assets for retirement up to this point in your life. When you’re in your 30s or 40s, it’s easy to have an aggressive attitude toward investing because two things are on your side:

•      Regular income from your employer.

•      Time.

When you’re young and still accumulating assets for retirement, you can afford to take on more risk. When in your 50s or 60s, you should be in a preservation mode to protect the assets that you’ve accumulated over your lifetime. You should also be looking at safer alternatives and setting up your own personal lifetime income stream, so your money will last as long as you do. At this time in your life, you cannot afford to make mistakes with your hard-earned retirement money. It’s important to talk with a financial professional to help you safely plan for you and your loved ones.

Treating your assets the same way you did when you were in your 30s or 40s could have a devastating effect on your retirement. Know your risk tolerance and adjust your risk to where you’re comfortable with the risk versus reward.

A majority of the people I meet with do not have a written financial plan for retirement. Everyone’s busy putting a roof over their heads, building their careers, sending their kids to college, paying for weddings, and so forth. According to a study by the Harvard Business School, the chances of obtaining your financial goals increase significantly if you have a written plan (versus a plan that hasn’t been written down, or no plan at all).(1) If you were on a road trip and didn’t have a GPS or map, reaching your destination would be pretty difficult, right? It’s the same with finances. You should talk to a financial professional who will help you come up with a plan to achieve your retirement goals, including answering questions like:

•      What do you plan to do when you retire?

•      What do you need to do now to secure your retirement?

•      What is your desired retirement age?

•      How much will your monthly expenses be in retirement?

•      How much will your health insurance cost?

A majority of people today aren’t happy with their current positions. While early retirement is a great alternative to working, you should make sure that you consider all of the factors involved. The following are a few common challenges that could devastate your retirement:

1.    Inflation: When you retire, you should prepare to spend 20-30 years in retirement. You’ll also have to plan for inflation.

 2.    Market Risk: When you are in or near retirement, consider taking less risk and shift to dependable, predictable income.

3.    Taxes: It’s imperative to coordinate your distribution from the correct bucket of money. Each bucket (Social Security, capital gains and dividends, retirement assets/pensions, Roth IRAs) can be taxed differently. Avoid excessive penalties or unnecessary taxes.

4.    Medical Issues: You may be forced to withdraw or “spend down” your assets to pay for medical bills, assisted living, or nursing home care.

This content was brought to you by ImpactPartners Voice. Insurance products, including annuities, offered through David Bartman, licensed in MI: #0480318. DT 500966-0519

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