Planning for retirement can seem like a daunting task. Everyone who has experience in the matter seems to have their own method. However, there isn't a "one size fits all" solution that will work for everyone planning for retirement. This article is meant to clear up some of the murkiness that lies in retirement planning and will cover five steps to help you plan for your retirement.
Estate Planning deal with finding a place for all of your assets after you pass away. Things like, "Who gets your house?" This is typically drawn up in a will and is very easy to do, however, most people tend to avoid having a will drawn up because they don't want to think about the idea that they may not be here one day. Overall, it is a great idea to have a plan for your loved ones after you pass.
Taxes and Retirement
Two things in life are inevitable, death and taxes. Yes, even once you retire, you will still have to file and pay taxes. How much you pay in taxes has quite a bit to do with where you live. Ever wonder why so many people retire and move to Florida? Yes, it is warmer year round, but their tax rate on retirees is also better than, for example, New York.
Social Security is a government organization that pays you a portion of your pre-retirement income based on your income on your highest earning 35 years of work. If you are currently working, a portion of your check is going to pay taxes into Social Security, which are being enjoyed by current retirees and their beneficiaries. Once you retire, your Social Security payments will come to you via the current workforce. More information about Social Security benefits can be found at the following website.
Required Minimum Distributions
A Required Minimum Distribution, or RMD, is the minimum amount of money you must withdraw from any retirement fund you have set up once you turn 70 and on half years. This can include IRA's, 401k's, and various other retirement plans. The RMD changes based on how much you have in your retirement account and how much was contributed to that account throughout a calendar year. You can withdraw more than the required minimum distribution every year, but you must withdraw at least that much money every year.
Budgeting Your Retirement
Budgeting during retirement is very similar to budgeting before retirement. The key to this is to sit down and budget out your monthly expenses for everything. This includes utilities, car payment, and anything else you might be spending money on throughout the month. Then, add any extra spending money you may want to have on hand. This all may seem unnecessary, but since you'll be on a fixed monthly income, you'll want to make sure you don't run out of money before the end of the month.
While planning for retirement may be a rather large task, there are people out there who are more than willing to help you find the information you need to make an informed decision. If you're interested in learning more about planning for your retirement, please fill out this survey to gain a better perspective on your future.