We all make mistakes, and through them, we learn. But when it comes to finances, it is best not to take the trial-and-error approach. Avoiding some of the following financial mistakes might save you a great deal of money and heartache.
Withdrawals from 401Ks
Nothing guarantees you sufficient money to cover all possible costs in retirement, but you can steer clear of some common mistakes as you enter your golden years.
Your financial life, like climbing a mountain, does not end when you reach the summit, your retirement. Getting down safely, or making your retirement income last, requires a set of different strategies. How can you withdraw your money without depleting it?
Last year I reached a milestone age: 59½, old enough to withdraw money from my individual retirement accounts with no penalty. While this felt bittersweet, it did remind me of the importance of timing when it comes to taking money out of retirement accounts. Withdrawing at the wrong time can create serious tax consequences.
We all often hear about how dire the retirement outlook for Americans is. While the overall situation is scary, I like to focus on the benchmarks that everyone can target without feeling like they’re losing before even starting.
Though I recognize that the alternative is much worse, getting older is for the birds. I hate the word “senior.” I do enjoy senior discounts but can gladly renounce them for just a small amount of real respect – and that includes in financial matters.
How much can you spend in your retirement? Answering this pivotal question requires you look hard at your current spending and how long you can expect to live – and at new approaches to using both factors in your plan.
An important part of your annual update of your retirement plan is new facts and circumstances. The problem: You may overlook important variables even as basic as the right retirement age.
For most folks, when you reach 70½, you must start taking money from your retirement accounts every year. A little flexibility exists in the first year for you to plan withdrawals to your tax advantage.
The first step of successful investing is setting goals. Right goals. Having a long-term stable income for retirement is a right goal. Accumulating $1 million is not.
Saving for retirement is one thing, spending those savings wisely another. One school of thought says you must withdraw consistently from your savings to simply avoid exhausting cash before you die. Another believes in adjusting withdrawals depending on changes in your later years. Which is right for you?