Retirement planning is an important piece to the long-term financial puzzle. If you take the right steps in advance early on, you can accumulate the resources that you need to enjoy your golden years in comfort. You can spend quality time with your family and friends, engage in leisure activities, and cross things off your bucket list.
Social Security Benefits
Most people rely on Social Security benefits to provide income during their elder years. The age of full Social Security eligibility is between 66 and 67 depending on the year of your birth. It is possible to accept a reduced benefit when you are 62, but the reduction is significant.
You could choose to delay your application submission until you are as old as 70. If you do this, your benefit will be increased when you actually start to receive it.
When you are budgeting for your senior years, you should know what you can expect to receive from Social Security. It is possible to register your account on the Social Security Administration website to gain an understanding of your anticipated benefit at any given time.
Individual Retirement Accounts
An individual retirement account can augment your Social Security payout when you are a senior citizen, and there can be estate planning benefits as well. Though there are variations, there are essentially two different types of individual retirement accounts: traditional IRAs, and Roth IRAs.
With a traditional individual retirement account, you make contributions before you pay taxes on the income. In the near term, this saves you money, because you pay taxes on the less income. On the other side of the coin, when you take money out of the account, the distributions are subject to regular income taxes.
You can start to accept penalty-free distributions from the account when you are 59.5 years old. Because the IRS wants to get its money at some point, you are required to start taking mandatory minimum distributions when you are 72 years of age. The age used to be 70.5, but it was increased as a result of provisions contained within the SECURE Act.
If you leave assets that may remain in your account after your passing to a beneficiary that is not your spouse, the beneficiary would be required to take mandatory distributions. They would be subject to taxation, and the beneficiary would be required to assume possession of the entirety of the account within 10 years.
The other most commonly used type of individual retirement account is the Roth variety. When you have this type of IRA, you make contributions after you pay taxes on your income. As a result, if you choose to take money out of the account, you do not have to report the distributions as income.
Another major difference between a Roth individual retirement account and a traditional IRA is the fact that you are never required to take distributions from a Roth IRA.
Schedule a Retirement Planning Consultation!
Now is the time for action if you want to be able to enjoy a comfortable retirement. A comprehensive plan for aging will address the active retirement years along with the twilight years that will follow. Legacy planning is the final step in the process.
We would be more than glad to gain an understanding of your situation and help you establish the perfect retirement plan. You can schedule a consultation if you call us at 843-815-8580. There is also a contact form on this website that you can use if you would like to send us a message.