Planning for the Retirement Dream


Many of us picture our retirement years spent enjoying life without working, but have you

planned for everything? Will you be able to live the golden years as you envision them? Here

are some unexpected and often underestimated expenses and tips to consider when planning

for the golden years.

1.  Medical expense:. How long do you plan to live? People are living longer and as we age

our health starts to decline which could mean an increase in your medical expenses. Planning

to live longer but not changing the way you save for retirement could deplete your savings

earlier than expected. In order to compensate for this you can increase your savings and start

making lifestyle changes now. Improving your health by exercising, eating right and dropping

unwanted weight could put you in a better position for a healthy and less expensive retirement.

If you are a smoker have you considered beginning a cessation program?

2.  Taxes: Do you plan on retiring where you live now or will you move to a tax-free state?

The idea that we have enough money saved in our retirement accounts to handle all of our

expenses is an old myth. Expenses are increasing for everyone and planning for them right

can include predicting your taxes. Taking into consideration where you will retire can help you

identify your annual state taxes as well as any taxes on your IRA contributions. Currently, there

are only a few states that do not allow IRA contributions to be deducted from taxable income.

There are benefits to relocating to a state with lower taxes, but the state you decide to retire in

will affect how long your retirement dollars will last. Planning for the city you want to retire in and

calculating your tax potential can help you project how much to save.

3.  Inflation: I know what you’re thinking – you’re earning interest on your accounts and

investments now, so why do you need to include inflation in my retirement plans? Thinking your

retirement money in high risk investments will be able to keep pace with price increases is a

common mistake. Strategies like this may leave you with less money, not more. Since your

major risk related to inflation is health and medical, you should establish an emergency fund for

such instances. What your money buys is just as important as how much you have. When is

the last time you made adjustments to your portfolio to compensate for inflation? Take a look at

your portfolio and consider making some adjustments this week.

4.  Plan: Having a plan and sticking to it will help manage your income goals as well as a

scheduled withdrawal rate from your accounts. Including unforeseen expenses in your long term

plan will help you make informed decisions about which accounts to withdraw from first. Review

your plan every year to ensure you are on the right track, especially after you retire. Creating a

strategy and sticking to it will help make your money last.

So what do you think? Have you added these to your retirement strategy? Perhaps you have

considered some of these in your planning and that’s great, but when is the last time you’ve

made adjustments to diversify your portfolio? The bottom line is we are living longer and

planning for a healthy future starts now. Creating a plan that encompasses a healthy lifestyle

is the smart move for your retirement and financial future. Make sure to review your planning

strategy and be sure to account for inflation, taxes and an annual review of how your plan is

performing for you. Are you ready? Mark your calendar and take action annually to get ready to

live your retirement dreams, the way you intended.

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