Many people say the transition from saving to living off their savings is one of the biggest challenges of retirement, due (at least in part) to complex tax rules and uncertainty around how long their money will last.
The key to making it smoother? Planning. But where should you start?
Here’s what we recommend, before you retire:
Get to know your retirement income sources
Include all retirement, bank, and brokerage accounts, plus other income (like Social Security, a pension, annuities, or HSA funds you’ve saved for future health care costs). Make sure you know:
- How much you’ll receive from each source
- When you can withdraw your money (take distributions) without a penalty
- How each source will be taxed
Take a close look at your expenses
Include money for needs (like food, housing and health care), wants (like travel and entertainment) and wishes (like gifts or a second home). Ask yourself:
- Should I pay off my debt or mortgage before I retire?
- Should I relocate or downsize to reduce costs?
- Am I considering health care costs (before and after age 65)?
Start planning your retirement income
Income and expenses are a good place to start. But to make sure your money will last as long as you need it to, you’ll need a more comprehensive plan. Your plan should help you determine:
- How much you can spend
- How to invest
- How to get your money when you need it
- How to stay on track over time
To connect all the dots in tax-smart ways, consider working with a financial planner, tax advisor or, most efficiently, both.
As always, if you have any questions, or you feel our team at Voisard can be of assistance, please do not hesitate to reach out.
https://www.schwab.com/retirement-planning/nearing-retirement
