Many of today’s retirees are the wealthiest retirees of all time. Before the recent inflation numbers and market correction, there was a prolonged period of rising home values and strong market returns. You’re part of a generation of dedicated workers, meaning that there are more millionaires than ever. But, even if you have built a substantial nest egg, you may not feel like a millionaire and may be worried about how you’ll maintain your lifestyle in retirement and avoid running out of money in this new economic environment. Here’s what millionaires next door can ask themselves when planning for their retirement in a new financial landscape.
Do I Have Enough to Retire in Comfort?
Don’t know how much you need to save before you can retire? Start by figuring out how much money you’ll need year-to-year in retirement. List out your major expenses, think about if you’ll want to travel or pursue more leisure activities once you have unlimited free time, and start tracking your expenses. There’s no magic number you need to hit. Everyone’s income needs in retirement are different. It’s also important to have a strategy for not outliving your savings.
Where Will My Retirement Income Come From?
Social Security may not make up the bulk of your retirement income, but it can provide guaranteed income for the rest of your life. If you want to supplement your Social Security check and distributions from a 401(k) or IRA, you may consider an annuity. An annuity is an insurance-based financial product that accepts funds and then pays them back later in a stream of payments or a lump sum. An annuity can be thought of as the opposite of life insurance and help protect against outliving your money by providing guaranteed payments to you for life or a pre-determined amount of time.
How Much Will My Future Taxes Be?
While you may not think of taxes as a risk factor, the fact that they can be raised makes them a risk. This is especially true if you have a significant amount of money saved in a taxable account like a traditional 401(K) or IRA, own real estate, or want to pass on your wealth in a tax-efficient manner. Taxes may be relatively low right now compared to later in your retirement. Most of the provisions in the Tax Cuts and Jobs Act will expire at the end of 2025, and the Biden administration has supported several tax-increasing measures on individuals. By taking advantage of current rates and working with a professional, you can create a long-term tax minimization strategy for retirement, and adjust it as needed.
What Can I Do to Get on Track?
By the time we reach a certain point in our careers, we become experts. The same goes for parenthood if you have experience raising children or stepchildren. Practice makes perfect, and specialized knowledge can be invaluable. Just like you became a master of your trade, we’re a master of ours. We help guide people through the retirement process and create a plan that’s designed specifically for them. Schedule your complimentary retirement readiness meeting to get started.
Securities and advisory services offered through Royal Alliance Associates, Inc. (RAA), member FINRA/ SIPC. RAA is separately owned and other entities and/or marketing names, products or services referenced here are independent of RAA. RAA is not affiliated with Lone Beacon
Neither the named representative nor the named Broker/Dealer or Investment Advisor gives tax or legal advice.
Fixed index annuities are designed to meet long-term needs for retirement income. Early withdrawals may result in loss of principal and credited interest due to surrender charges. Distributions may be subject to ordinary income tax and, if taken prior to age 59 ½, an additional 10% federal tax. An income rider or benefit (sometimes called Guaranteed Lifetime Withdrawal Benefits, or GLWB) is an additional feature available with some annuities and generally optional and come with additional cost. Income benefits are designed to provide income options above and beyond the standard annuitization or free withdrawal features in annuities. All contract gains beyond the CAP rate are surrendered to the insurance company to pay for the expense of the product.
The views expressed are not necessarily the opinion of Royal Alliance Associates Inc, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Individual circumstances vary. Investing is subject to risks including loss of principal invested. No strategy can assure a profit against loss.