Retirees Need to Find Debt Relief and A Solid Financial Plan
On the brink of retirement
Many retirees are looking for debt relief as they settle their finances. After years of wise saving and careful investing, you may find yourself on the brink of retirement. Although you may be tempted to quit immediately and look for a nice quiet home to retire in, there are still some things that should be addressed. Here are some things to settle before leaving the workforce for good.
Your retirement funding
First you need to figure out the amount of funding you need to retire. At the beginning of your career it was more difficult to estimate future expenses. Now that you’re on the brink of retirement, you know how much you need to sustain your lifestyle and have extra daily cash. Make sure you address the following issues when assessing your retirement fund.
- Where do you plan to live? Do you plan to keep your home? Do you still have some mortgage payments left? Will you sell your home and downsize?
- Consider the length of time you need funding for. Statistics show that the average man today lives until 82 and the average woman lives until 85. That means you need on factor in about 20 more years of retirement funding.
- Are you planning to work part time? If so, you’ll still be generating an income to work into your calculations.
- What will your lifestyle be? Normally 60 to 80 percent of your current income is how much you’ll need after retiring. However, that doesn’t include extras such as travel, starting a business or helping fund a grandchild’s college. You may need to keep the same income during retirement.
Put together a list of all your income sources. This should include pensions, Social Security and investment income. Add the cash value of your life insurance policies, income from real estate and the equity you have in your home. Deduct any payments you are going to need for debt relief, and that should give you the extra funds you’ll have monthly.
The next step is to figure out how much money you’ll be withdrawing from savings and what rate you will be depleting it. A standard figure is to liquidate 5 percent of the principle each year of retirement. Again, this number must be customized based on your plans for retirement.
You also can look at your tax-deferred and taxable investments. Your tax-deferred investments naturally compound and they have a greater potential value. Earnings and deductible contributions however, are subject to taxes once withdrawn.
There are also RMDs, or required minimum distributions, to consider. These numbers are based on the IRS life expectancy tables. If you don’t take the right distribution on schedule, you could be subject to up to 50 percent of the required amount. Be sure to check with your retirement planner to stay aware of all changes in these rules.
A rock-solid will can help you
To fully settle your retirement planning, you must address your will and the distribution of your estate. A rock-solid will can help to quell any arguments or fights about money issues from those who you name as beneficiaries, and those who you don’t. Also check to make sure the beneficiaries on all retirement accounts and life insurance policies are current.
Enjoy your Retirement
Finally, once the above items are settled you can cruise into your official retirement. It pays to do some careful planning to make sure your finances are in order. You don’t want to leave open-ended wishes or your family to manage your debt relief. Take aim to sort through your retirement so everyone can enjoy it. Then, you can rest and have some peaceful years, and your family can enjoy knowing you’re taken care of.