If you are like most people it may be a good idea to balance your spending to achieve a successful retirement. There are many potential pitfalls to avoid and one of the easiest is funding your retirement immediately upon entering retirement. While it may be always tempting to quickly find the money to put towards immediate expenses you should research the truth about pre-retirement spending. There are two offered options when it comes to funding your retirement – you can draw down on your retirement benefits or, you can annuitize your investments. Both have their pros and cons.
Drawn down options imply that the funds you withdraw from your retirement are only a portion of the total amount amortized over the length of the plan. You end up paying less interest on a loan and paying less directly to the principal balance then left on your own at age 70 ½. This option can be appealing to those who need a sizeable boost to put them in a better position to gain if, for example, they have health automobile needs. If you take a drawdown on your retirement benefits you may still receive payments for your retirement benefits when the money is taken out of your current account.
What about the retirement plan
An annuity is a retirement plan with an income tax penalty added to the payment at retirement. The payment is typically taxed as ordinary income. There are alternatives to an IRA, but a retirement plan is typically the easiest plan to stick with. Those who are expecting to draw down on their retirement plans should add money over the minimum required in the IRA so that they can keep tax owing from decreasing.
Concerning these options, the best advice is to research all your options. The best plan of action for you and your spouse should balance the best interest for you with the protection and available benefits for both of you. Try to adjust your set of financial goals moving forward and take the time to carefully examine the situation. If you are heading in the prepaid retirement environment. Here is some advice to divide your purchasing80% into a customized strategy on your educational needs and lifestyle 5% into a retirement plan with an IRA vs. a Roth IRA%. The highest-earning interest ridden accounts is performing at outperforming historical interest rates. You are from the better side when you have the lowest balance in your accounts. Contact us today for a complimentary consultation!
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