Retirement is something that we often don’t think about until later in life, but we should really prepare for much sooner in life. Whether you’re in your 20’s, 30’s or 40’s, it’s never too soon to start planning. Here are 5 retirement planning tips to consider.
1. Start Saving Early
We can’t stress this enough. The earlier you start saving, the more you will save. You will also have more time to earn interest and compound that interest. Your savings will have more time and opportunity to grow. Intentionally saving for retirement not only creates a nest egg, but it also establishes good financial habits that will benefit you in other ways.
2. Establish Accounts with Tax Benefits
It’s important to take advantage of available tax benefits when saving for retirement. For instance, for 2018, you may contribute up to $18,500 pre-tax to 401(k) accounts or $5,500 to Traditional IRA accounts. There are income limitations, phase outs, and catch-up contributions to consider as well. Ask your financial advisor or tax accountant for more information on how you can maximize tax benefits for retirement savings.
3. Re-evaluate Investment Strategies Yearly
Investment accounts such as 401(k) and IRA’s are market based. Strategies can vary in risk level and potential returns. At different stages in your life, you may invest differently depending on whether your goal is to preserve versus grow your savings. Therefore, it is important to evaluate your accounts on a yearly basis or even more frequently.
4. Estimate Your Retirement Spending Needs
Our retirement planning tips wouldn’t be complete without addressing what your needs will be in retirement. The cost of living is different for everyone. It often depends on where you live, your lifestyle, family financial obligations, etc. You have probably heard about the 75% rule, which estimates that your cost of living in retirement at 75% of your current cost of living. Given when you’d like to retire and your life expectancy, how much will you need to save before retirement?
5. Consider Health Care Costs
As you estimate the cost of retirement, don’t forget to include health care expenses. Not only do your health care needs change later in life, but your medical coverage will as well. Medicaid planning is one of many Elder Law Services provided by our team. Contact us for assistance planning for elder health care needs.
Other Retirement Planning Tips
Retirement planning and estate planning often go hand-in-hand. Both aim to preserve your assets and savings and include strategies such as tax minimization and providing for medical care. Sit down with our estate planning and elder law attorneys to create an estate plan that covers your retirement years and beyond. Contact us today to schedule a consultation and be sure to follow our blog for additional retirement planning tips.