If retirement is approaching, you may feel pressure to kick your financial plan into high gear. Just don’t do anything rash; we don’t recommend a get-rich-quick scheme like the one cooked up by Walter White in “Breaking Bad.” Instead, follow these five tips for a more sensible approach to retirement planning.
Assess the Situation
A solid understanding of your current finances is a must for any retirement plan. Take a hard look at your income, investments and account balance averages to ensure that you’re on the right track. Retirement calculators can help you determine if you have what you need to sustain your lifestyle in the coming years. Knowing where you are now can help you decide where to cut expenses, add income or make changes to your investments.
If you haven’t already, familiarize yourself with the ins and outs of planning for retirement. Understanding the tax implications of IRA vs. Roth IRA account withdrawals, as well as basic Social Security rules, can help you decide whether you need to put off retiring for a little longer than expected — or if you can move full-steam ahead toward your retirement dream.
Go over your accounts with a fine-toothed comb. Are there administrative fees you never noticed? Decide if your investment accounts could be better served by firms offering lower fees. Does your investment portfolio carry too much risk as you close in on retirement? If so, the good news is that the promise of rising interest rates means your lower-risk investments will likely perform better in 2017. Fixed annuities are a good bet now.
In addition to reducing risk in your investment portfolio, protect yourself from the unexpected with a substantial emergency fund. Everyone should have cash set aside in case of major car repairs, medical expenses, costly home repairs and other unpleasant surprises. But, now more than ever, having two years’ worth of savings available is key. Long-term healthcare costs are another important consideration. Medicare only covers certain long-term care expenses, and your health insurance policy is only designed to protect you in the here and now. If you’re in good health, now is the time to consider long-term care insurance.
Pay Off Debts
Wiping out installment loans, credit card balances and other personal debt now can help you create a brighter future. Whether you follow the advice of a finance expert or construct your own plan, eliminate debt now to remove a hefty financial and emotional obstacle from the path to your retirement dream.
Walter White took drastic measures to create a monetary cushion for his family. Luckily, you have plenty of options at your disposal to avoid the fate of the main character in “Breaking Bad.” Taking these retirement planning steps can help you achieve peace of mind, maintain healthy finances and enjoy your current lifestyle in the years to come.