IS IT TIME TO RETIRE?
By David Durham, MSFS CAP, firstname.lastname@example.org, www.durhamloyal.com
Photo Credit: thewealthscene.com
RETIREMENT first and foremost involves a big change in how you look at your money. During your career you are working for money, whereas in retirement your money is working for you.
LIFESTYLE—A DREAM COME TRUE
Successful retirement is the ability to maintain and sustain throughout your retirement years a lifestyle comparable to what you achieved at your peak during your working years.
The most rewarding benefit of retirement is having the freedom to live your lifelong dreams. Here is where everyone gets to fill in the blanks as they so please. What’s your pleasure? Dream dreams that are not fulfilled yet, and then say “why not” for your sunset years. Go for the gold; after all, silver tarnishes!
SOME KEY POINTS TO CONSIDER—THE “WIN/WHEN” FACTOR
Deciding when to retire may not be one decision but a series of decisions and calculations.
~AGE—KEY DECISION POINTS:
59 1/2 In many cases to have reached age 59 1/2 before retiring is vital because that is the age at which one can begin withdrawing funds from tax-deferred savings called “qualified” accounts, such as IRA’s, 401k’s, 403b’s , 457’s and pensions, without incurring large penalties and higher taxes.
62 You are eligible for Social Security benefits.
65 You are eligible for Medicare.
65–67 (depending on when you were born) You have reached full retirement age for Social Security.
The good news is that most retirees find themselves paying a lower percentage in taxes during retirement. However, state income and real estate taxes vary significantly from state to state; thus, before choosing when and where to retire it is prudent to consider all state and federal taxes payable in your chosen retirement state.
~SOCIAL SECURITY (SSA)
As I stated in last month’s article, deciding which strategy to apply in determining the amount and timing for taking your Social Security benefit is also crucial, because the amount shown on your SSA statement may actually be far less than you could actually receive as a result of applying planning strategies. A little extra effort to look behind the curtains can make a big difference—as in hundreds of thousands of dollars over a couple’s retirement lifespan.
So often when I meet with clients to discuss their retirement plans, they are not aware of the several choices available for how their pension is payable. For example, the highest payout amount might appear to be the best choice, but the problem is that this type of payout stops when the recipient dies, leaving the surviving spouse with nothing.
Now if pre-planning takes place before the type of payout is chosen, then life insurance for those who qualify can be a very cost-effective part of the pension plan to assure a maximum payout for both spouses, not just one. Life insurance can be a magical multiplying factor in our retirement plans. After all, we insure every other valuable asset—a car, a home, our health, and even a piece of art—so why not insure our income streams, a charitable bequest, a grandchild’s education or the continuity of a business.
Postponing retirement lets you continue to add to your retirement savings and reserves for emergencies; how about rewarding yourself with a new car, a new kitchen or some other special treat that you might not do when retired.
SHORTCUTS—SEEING IS BELIEVING
An overall retirement income plan is essential. This is where all the pieces of the puzzle create a very clear picture for you to see just what your retirement years will look like, both in calm, easy, sunny days and during the stormy, rough times that life can unexpectedly bring our way. Remember, your retirement could last quite a while. Consider this: according to a National Vital Statistics Report, people today can expect to live more than 30 years longer than they did a century ago.
SO WHAT’S THE ANSWER?
TAKE A SHORTCUT
The best advice I can offer is that you arrange a visit with a Financial Advisor who specializes in Retirement Planning such as myself. I assure you, the experience will be enjoyable, enlightening and encouraging. Call now to arrange a visit: (800) 567-0197.
Note from the Editor:
David J. Durham is President and Founder of Durham Loyal, Florida’s premier full-service financial advisory firm amongst the retired and soon to retire business owners and highly paid executives. His firm is widely acclaimed by clients, CPAs, and Estate Planning Attorneys in 15 states and five countries for over 35 years. David is a leading financial expert who graduated from the University of Texas with a degree in International Business and from The American College with a Master of Science in Financial Services. He’s a member of the Society of Financial Services Professionals and a qualifying member of the Million Dollar Round Table.