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How To REALLY Get Ready For Your Retirement Years

According to the U.S. Census Bureau, about 77 million “baby boomers”—people born between 1946 and 1964—were alive when the first wave of boomers turned age 65 in 2011.  Now, more than 10,000 baby boomers celebrate their 65th birthdays every day, and by 2030 those who are 65 and older will represent an estimated 20% of the entire U.S. population.

If you’re part of this demographic surge, it’s essential to plan ahead for your pending retirement, which is likely to last much longer than those of previous generations.  Someone who’s 65 now can expect to live to 84.3, on average, according to the National Center for Health Statistics.  So you easily could live for 20 years or longer after you retire.

How can you prepare financially for what’s ahead?  While there are no guarantees, these three ideas can be sound strategies for the future:

1. Slide into retirement gradually.  Retirement doesn’t have to be like a bandage that you rip off quickly.  Staying on the job longer has obvious financial advantages. If you’re still earning a paycheck, you probably won’t need to take early Social Security benefits or distributions from your retirement plans or IRAs, and waiting longer to begin your withdrawals will mean bigger payouts.  But a gradual transition to retirement also may help in other ways.  Many people simply aren’t able to cope with such a drastic lifestyle change in one fell swoop.

If you’ve been an executive, or you’re a business owner or partner, you may be able to stop working full time but continue as a consultant.  That can help your company, too, and you may retain some valuable fringe benefits.  In addition, when you work part time, you can continue to contribute to retirement plans and IRAs. 

2. Time your Social Security benefits.  Deciding to keep working at least part time can affect when you file to begin receiving Social Security retiree benefits.  You can start as early as age 62, but the monthly amount you receive then will be about 25% less than if you’d waited until the normal retirement age for full benefits (age 66 for most baby boomers).  If you delay benefits even longer, until age 70, your monthly check will be about 8% more each year than the monthly amount you would have received at full retirement age.

Deciding when to begin benefits requires an in-depth analysis of your circumstances.  Also, keep in mind that you may have to forfeit some Social Security benefits if you’re still working before your full retirement age. Usually, it doesn’t make sense to apply for benefits if you then have to give back part of the monthly payout.

3. Take systematic withdrawals.  When it comes time to start taking distributions from the assets you’ve accumulated—and the longer you can postpone this, the better—it’s wise be systematic about it.  One traditional method is to use a 4% solution, withdrawing 4% of your account balances in the first year and then adjusting subsequent distributions based on market performance, inflation, and other factors.  Yet there are limitations to that method, and we can work with you to assess your personal situation and create a customized, systematic approach that works for you.

However you proceed, there are a few basic guidelines about when to tap each of your sources of retirement income.  It’s normally best to start with taxable accounts, such as stock and mutual fund holdings that aren’t in tax-advantaged retirement accounts.  Generally, these distributions will result in long-term capital gains, taxed at a maximum rate of 15% for most investors and 20% if you’re in the top tax bracket for ordinary income. Then you can take money from traditional IRAs and retirement plans such as 401(k)s; that income will be taxed at your ordinary income rates.  You’ll likely want to save Roth IRAs for last.  Unlike with other retirement accounts, which generally require you to take minimum withdrawals after age 70½, you can leave your money in a Roth as long as you like, and distributions from these accounts generally won’t be taxed.

These three strategies aren’t all you’ll need to consider in positioning yourself for a long retirement.  But making a gradual transition into your retirement years, figuring out the best timing for your Social Security benefits, and tapping your assets in a logical order can go a long way toward improving your chances for a successful retirement.



INDEX
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  • Live Longer And Prosper In Your Golden Years
  • 6 Ways To Close The Retirement Gap
  • IRS Closes Valuation Loopholes
  • Passing Down IRA Assets? Clue In Family Members
  • This Type Of Trust Is A Failure
  • Grandparents Can Become Big Spenders For Their Offspring
  • Time Your Social Security Benefits For Top Results
  • Watch Out For These 7 Retirement Ups And Downs
  • Why Would Anyone Take Their RMDs Sooner?
  • 10 Frequent Retirement Mistakes You Should Avoid
  • Tax Rewards For Year-End Generosity
  • Meeting With The Family For Elder Care Planning
  • 20 Questions On Required Minimum Distributions
  • Tie The Knot For Retirement With A Spousal IRA
  • Four Retirement Planning Rules Of Thumb To Bend
  • When Will New College Grads Be Able To Retire?
  • Last Chance To File-And-Suspend Retiree Benefits
  • You Know You're Getting Old When You Get RMD Notice
  • 10 Steps To Take On The Path To Early Retirement
  • How To REALLY Get Ready For Your Retirement Years
  • Can You Skip Over The Special Tax For Generation-Skipping?
  • What Do You Think Your Life Will Be Like In Retirement?
  • Raiding A Roth Early? No Woes
  • Live Long And Prosper: Roll Out A Stretch IRA
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  • Figuring Out How Much You Need In Retirement
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  • Five Ways To Plan Smarter And For The Long Haul
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  • Generation X Members Have Retirement Work Cut Out For Them
  • Booted From A 401(k)? Don't Despair
  • It's Tough To Decide If You Should Retire Early
  • Saving For Retirement At All Ages
  • Which Type Of IRA Do You Prefer?
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  • Roundup Of New Estate Tax Changes
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  • Two More Important Choices For Retirement Living
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  • The Benefits Of Working With An Advisor
  • Setting Up A Roth IRA Through The ''Back Door''
  • Eight Of The Best Tax Strategies To Use In 2012
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  • A Case Study: Retirement Planning In Your Fifties
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  • The Obama Bank Plan And The Risks It Poses
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  • Beware of Brokerage Firms' Misconduct
  • Identity Theft : Correct Those Credit Reporting Errors
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  • Q & A With Robert Arnott
  • Identity Theft : Applying For Credit? Better Check Your Credit Report First
  • Indentity Theft: Help Is On Its Way
  • Identity Theft: Everyday Prevention
  • Indentity Theft: Tips to Protect Yourself
  • Identity Theft : Tips to Protect Yourself
  • Identity Theft: A Note About Social Security Numbers
  • Identity Theft: Which Documents Should You Shred or Store?
  • Identity Theft : Don't Fall For That E-Mail!
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  • What Do Rising Interest Rates Mean For Money Market Yields?
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  • Bank Loan Funds: A Great Fixed Income Investment As Interest Rates Rise
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  • How To Find A Great Financial Advisor?
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  • Year-End Tax Planning Can Help Generate High Return On Investment
  • 4 Steps To A More Secure Investment Portfolio For Your Retirement
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  • Understanding Deflation
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  • Do It Yourself Tax Preparers Watch Out: Tax Answers From IRS Centers Oftentimes Are Incorrect And/Or Insufficient
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  • Home Office Deductions: Hoops To Jump Through
  • Income Tax Effect On Single And Married Taxpayers
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  • Property Tax Challenges Should Not Be Overlooked
  • The IRS Will Follow Your Wealth To The Ends Of The Earth
  • Under New Law Taking Social Security at 65 Makes Sense for Most
  • When Do You Need Life Insurance
  • Year-End Tax Defferal Planning



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