Approaches to Retirement for People of All Ages: A "To-Do" Directory

 Approaches to Retirement for People of All Ages: A "To-Do" Directory

Taking action at various points throughout your life determines how well you'll be able to retire. Take a look at these potential actions. It should be noted that the investment portfolios depicted are merely for presentational purposes. It is up to you to determine the appropriate percentages and investments.

Initial Years of Your Profession

Invest as much as you can into retirement accounts like IRAs, 401(k), and Keoghs as you save for other things like a house or a family.

Limit the amount of debt you incur from various sources, including credit cards.

You should think about this if you aren't a home owner already. Buying a home isn't cheap, but it may be a great investment and qualify you for tax benefits.

You likely have plenty of time to be active with your investing before retirement. An example of a possible portfolio would consist of 60–80% equities or stock mutual funds and the remaining 40–50 percent in bonds, money market accounts, or CDs.

Ages 40–50 (Mid-Career)

Keep contributing as much as you can to your retirement accounts, including IRAs, 401(k)s, Keoghs, and more. A person can make additional "catch-up" contributions to their IRA, 401(k), or other retirement savings account once they reach the age of 50.

A home may be a great source of equity and a retirement residence, so it's a good idea to get one if you haven't already. Check the market rate of interest on a mortgage from time to time to see how it stacks up. Think about refinancing if the rates are better now.

Think about diversifying your investments away from risky stocks and toward safer, more income-generating options as you near retirement age. You might have half or three quarters of your portfolio invested in equities or equities mutual funds and the majority in certificates of deposit, bonds, bond funds, or money market accounts.

Mid- to late-career thirties

To find out how much money you would get in Social Security and pension benefits if you "retire early" compared to delaying retirement, consult the Social Security Administration, an accountant, or your company's personnel office.

Talk to your financial planner about taking funds out of your IRAs and employer-sponsored retirement plans when the time comes so that you can avoid paying taxes on them. Withdrawals are penalty-free after age 59 ½, but they will be subject to income taxes. By April 1 of the year after your 70 ½th birthday, and every year thereafter, you are required by IRS regulations to withdraw a minimum amount from 401(K), traditional IRAs, and specific other retirement savings plans. An exclusion applies to those who are still employed by the sponsoring employer of the plan.

Discuss the topic of estate planning with your lawyer or financial advisor. This involves arranging your finances in such a way that your money, property, and other assets can pass on to your loved ones with as little taxation, expense, and bother as possible.

Health insurance and long-term care insurance, which covers nursing home stays, are options you should consider. Think into if life or disability insurance is necessary.

Think about the benefits and drawbacks of paying off your mortgage early and try to reduce your consumer debt as much as you can. Before you retire, decide if you want to refinance your mortgage, get a home equity loan, apply for a credit card, or take out any other kind of loan you might require. Having a steady source of income from a job could open up more loan alternatives for you. Maintaining a manageable level of debt is critical regardless of the type or age of your loans.

You should think about lowering your stock holdings and boosting your conservative investing portfolio. Possible asset allocation: 30–60% in equities or equities mutual funds and the majority in certificates of deposit, bonds, bond funds, or money market accounts.

The Golden Years of Your Money

For retirees, the regulations can be a maze. Consult a claims representative from the Social Security Administration around one year prior to your intended retirement date. You should submit your Social Security and pension benefits applications at least three months before your planned retirement date. You should research the potential effects on your taxes and Social Security benefits if you want to work part-time.

Set up direct deposit for your checking account for any regular payments you receive, such Social Security benefits. For further information on how to choose between a lump amount and periodic payments from your 401(k), contact your HR department or a financial counselor.

Pay down your debts to the maximum extent feasible. Think twice before getting a reverse mortgage or taking out a home equity loan.

Invest cautiously in things that can provide income, but don't discount the possibility of investing in stocks or mutual funds. One possible allocation is 20% to 40% to equities and the remainder to fixed-income assets like bonds, money market accounts, or CDs.

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