How to Get Your Finances Ready for Retirement
Everyone has a vision of their retirement in their heads. It could be the quintessential condo in Florida, moving closer to the grand kids or taking off to travel the globe — but whatever it is, you won’t get it for free.
To live the retirement you want — for the full 20 or more years after you stop working — you need to plan ahead and work to save enough money to cover your costs. The first step in the planning process is deciding what you want to do in your retirement. Once you know that, you can calculate your anticipated retirement costs and work on a plan to save enough to carry you through your golden years.
Taking these steps can potentially make it easier for you to reach your savings goals by the time you’re ready to retire.
Max Out Your 401(K) Contributions
It may seem like a no-brainer, but many people leave money on the table when it comes to their employer-sponsored retirement accounts. According to research by Financial Engines, only about one in four employees took advantage of the full match their employer offers. Those who didn’t take advantage missed out on an average of $1,336 annually.
Make Tax-Savvy Investments
Taxes can eat away at your returns — and how much you will have to live on in retirement. While taxes aren’t avoidable, there are ways to potentially reduce the burden you face. Some strategies recommended in appropriate situations by tax advisors include paying attention to your mutual funds’ turnover rates, pairing the sales of winning stocks with losing ones to reduce your capital gains tax, and keeping interest- and dividend-generating investments in a tax-deferred account such as a 401(k) or IRA. You should consider consulting with your tax advisor to see if these or other strategies are right for you.
Pay Down Debt
Debt is the enemy of all savers, but for people nearing retirement it can be particularly perilous. With income limited, covering living expenses and activities is going to be hard enough. Add on high-interest debt and you may find yourself downsizing your lifestyle to pay your monthly bills. Work on paying down your debt by tackling the accounts with the highest interest rates first. And don’t stop saving for retirement while you do.
The Bottom Line
It’s possible to have the money you need to live the retirement you want, but it requires advance planning and careful savings over the course of your working life.
2018-261911 Exp. 6/22/2020
This material is intended for general public use to potentially assist you in planning for your future. By providing this material, Guardian/Park Avenue Securities is not undertaking to provide investment advice for any specific individual or situation, or to otherwise act in a fiduciary capacity.
Guardian and its affiliates, subsidiaries, employees, agents, and outside contributors, are not authorized to provide legal, tax, or investment advice in the materials of this website including but not limited to any blogs. The information provided does not constitute a solicitation of an offer to buy or an offer to sell financial or insurance products. Individual situations can vary; please contact a financial professional, your tax, investment or legal advisor for guidance and information specific to your situation. Guardian is not responsible for the consequences of any decisions or actions taken in reliance upon or as a result of the information provided by this material. To learn more about Guardian, visit GuardianLife.com.