You spent the better part of four decades either at the office or growing your own business. Now, though, retirement is finally on the horizon. With everything you should do in retirement, what things should you avoid doing altogether during your golden years?
The following can eat away at your nest egg in a hurry:
No. 1 – Taking Social Security too early
You can start receiving Social Security benefits as early as age 62. So for those who want to retire early, this is the way to go, right? Not exactly.
What many soon-to-be-retirees fail to realize is that it does matter when you start collecting Social Security benefits. For example, a 63-year-old sees a 25 percent reduction to their benefit compared to a 66-year-old, whose reduction is less than 7 percent. So steer clear of taking Social Security too early (benefits max out when you turn 70).
When the time comes, get in touch with Tactical Wealth regarding Social Security Optimization.
No. 2 – Failing to invest aggressively enough
Just because you’re nearing retirement doesn’t mean you can stop investing. Should you take an overly conservative approach during your golden years, you run the risk of outliving your money. With that in mind, continue building a diversified investment portfolio.
We’ll touch on this later, but don’t let the stock market dictate your financial future. As an alternative, begin exploring risk-averse investments and annuities.
No. 3 – Ignoring the impact of inflation
This is another critical mistake to avoid during retirement. Over the next few years, the inflation rate is expected to rise from 2.38 percent to 2.64 percent. Obviously, you want to get the most value for your dollar.
Now is a good time to mitigate the impact of inflation. For one thing, invest aggressively enough to stay ahead of increasing rates. You should also anticipate higher healthcare costs in the coming years and be prepared to adjust account withdrawals.
No. 4 – Forgoing a retirement budget
We’re guessing you stuck to a pretty strict budget during your working years. That frugal mindset should carry over to retirement, especially if you aren’t 100 percent confident in your nest egg. Figure out where you want to live, monthly bills (including health care costs), and ultimately, whether or not you have the financial resources to support your desired lifestyle.
If the math doesn’t add up accordingly, then you will need to make some adjustments. For some people, this could mean taking on a part-time job or finding more affordable hobbies. Remember that the last thing you want to do is run out of money.
No. 5 – Forgetting about tax implications
This is an issue for many retirees. But just because you’re no longer earning a paycheck doesn’t mean you’re done paying Uncle Sam. You must be accountable for income tax on retirement revenue and property taxes.
Tactical Wealth is proud to offer tax-efficient distribution strategies for your benefit. A Pro-Rata Strategy, Sequential Strategy, and Sequential With Roth Conversion Strategy are all effective when it comes to minimizing retirement taxes. Components worth considering here include salary/other income, investment income, taxable Social Security, taxable pensions, annuities, and withdrawals from tax-deferred accounts.
Making Sense of Our High Return Investments
Sure, there are various financial challenges that can surface during your retirement. But there’s also a lot that can go right. Whether the goal is traveling more, taking up a new hobby, or just spending time with the people you love, Tactical Wealth can help make your golden years the best time of your life.
The financial key to a stress-free retirement is steady, consistent income. That’s just what you get when you invest in a strategic income fund. The Tactical Wealth Fixed Income Fund offers the highest rates possible, with holdings backed by real estate and paired with an established risk mitigation plan.
Imagine using investments to replace your salary. Think about how nice it would be to receive consistent, reliable monthly income without sacrificing those savings accounts. It’s all possible with the Fixed Income Fund.