4 Benefits of Planning Retirement Early
Retirement is a stage in life where people have given up their stable stream of income and live off their savings accumulated during their employment years. Retirement can turn out to be an enjoyable stage of life if thought out and planned properly. On the other hand, it can bring a host of financial shortages and worry in the absence of sufficient planning and savings.
Retirement planning refers to making a proper plan for retirement including determining income goals for the future and laying out steps on how to achieve those financial goals. It encompasses multiple factors that impact the living condition of life in retirement such as identifying income sources, accumulating savings, estimating future expenses, managing assets and risk, and making wise financial decisions for long-term benefits. While it is never too late to begin planning for retirement, there are multiple advantages of starting early. This article will present four major benefits of early retirement planning in Georgia.
#1 Get More Time to Work Out Your Finances
An important component of retirement planning is calculating how much money you will need to live the lifestyle you dream of having. Once you work this out, you’ll be able to know approximately how much you need to save monthly or annually, and for how much longer you’ll need to work. If you start to plan for retirement from an early stage in your career, that will give you the advantage of time allowing you to save moderately without having to cut back on other expenses. If you are an immigrant who has become as US citizen,
#2 More Room for Making Smart Financial Decisions
Planning for your retirement early will enable you to align your career for the future and help you make better financial decisions. The best career choices and financial decisions for the future are not always apparent. With a priority for building wealth for the future, planning for retirement early will provide you more room and opportunity for making smart financial decisions. In other words, you will have more time and flexibility to set your career for achieving your retirement goals even if that entails changing your job or industry.
#3 Enjoy Tax Benefits
Retirement accounts are designed to provide as much benefit as possible to the holders, and this includes tax benefits. All the money you save in your retirement accounts will have one or another form of tax benefit resulting in the reduction of the amount of income tax you pay. The sooner you start planning for your future using retirement accounts such as traditional IRA, Roth IRA, and others, the more time and opportunity you get to grow your funds in these tax-friendly investment vehicles. You can’t wake up at age 50 and decide that you want to pour a bunch of money into these accounts. There are annual limits to retirement accounts including SEPs and IRAs. Using a life insurance policy that has riders to pay for retirement, long-term care, chronic illness, or terminal illness also has tax benefits.
#4 Retire On Your Own Terms
The majority of people in America want to retire early, but they cannot because of factors that are mostly related to financial insufficiency. Some of the major reasons include delayed social security eligibility, stock market declines and fluctuations, increased healthcare costs, and low amount of savings. Planning for retirement early can help to overcome these common challenges, allowing you to retire on your own terms. If you are an immigrant or have immigrant parents living with or near you, please note that to qualify for Part A medicare you must work 40 quarters (10 years) and pay your FICA taxes. You’ll never qualify for Part B if you or your husband don’t have 40 quarters or working or paying FICA taxes and becoming a US Citizen or have permanent residence status. Your social security amount is based on the highest 10 years of your income. If you are self-employed and report your own income on a Schedule C, don’t cheat yourself out of retirement money by reporting an incorrect low income to save on paying taxes. Social Security income can be as low as $700 to over $3600 a month. Which would you rather receive?
With the payout of full social security benefits being delayed until age 70 and people living longer, you might want to consider age 70 or 72 and not 65 as the new retirement age. A person turning 65 in September will have to wait an additional 18 months to get their full social security benefits. If you wait to start taking social security at age 70, you’ll receive an additional 8% more every year you wait. Age 72 and a half is when you will be required to start withdrawing money from your IRAs or SEPs. You will be taxed on any income earned beyond social security above $16,000 unless it comes from a Roth IRA account where you have already paid taxes.
Retirement planning is for life in the future, but this should not be seen as something that should be taken up only when close to retirement. In fact, planning for retirement from an early point during an employment career provides multiple benefits, and negates the complication and associated mental distress that comes with working with a small window for working out a retirement plan.
To work out the ideal retirement plan for your future, it is best to enlist the professional service of a retirement advisor. Stock brokers will want to balance your savings between stocks, bonds, and cash. Most CFP – Certified Financial Planners – don’t want to work with anyone who has less than $250,000 to invest. The average person age 65 and up will spend $250,000 on medical expenses for the balance of their life. If you’re not one of the lucky upper-class income people, perhaps getting the right insurance policies is a good start. Jessie Herman Insurance looks beyond stock and bonds and looks at Life Insurance, Disability, Long-Term Care, Mortgage Insurance, and special critical illness insurance policies that can finance the what-ifs in life. As an insurance advisor with an MBA from Northwestern University and years of experience under her belt. Turn to, Jessie’s expertise and service for creating the best retirement plan for your future.
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