Every time Monday rolls around, most of us whine about having to go work again. This feeling, most often end-up in the ultimate wish to retire early. While retiring early is a possibility for most of us, it requires a little bit of planning. To tackle all types of financial uncertainties after retirement you need to do a lot of planning to meet both the expected and unexpected expenses. Wondering how is this possible? Here are some tips that you can use to maximize your retirement income as revealed by the financial advisors
1. Savings is the key: There are many ways of doing this. Set up an automatic deduction from your pay check, so that you dont have to think about it. You will be able to reap the benefits on your investments by accumulating the compound interest. It is best to open a retirement account and save as much as possible on monthly basis.
2. Choose when to claim Social Security: Are you aware of the fact that the Social Security statement are available online since past over one year and about one million people have already downloaded them. To make sure that all the earnings posted in the Social Security are accurate, download your statement from the Internet to verify it. Also, keep an eye over the amount that you will be receiving from time to time by Social Security. It is not an intelligent decision to take social security amount the same year you retire. If you claim Social Security at the age of 62 to 70, you may get access to the postponed retirement credits.
3. Take advantage of 401k: It is extremely important to contribute to the 401K fund. Normally, the contribution to the companys offer 401 (k) is made prior of deducting taxes from the paycheck. In most of the cases, the employers include a match program wherein employers match the contribution made by you. In short, this is a free money. As a best practice, boost the retirement account contribution to the maximum of your capacity. It is recommended to open an IRA for extra tax advantage, in case you are already making the maximum contribution.
Some advantages of the 401(k) plan:
1. Reduced taxable income
2. Free contribution from employer
3. Guaranteed savings for retirement
4. Inflation proof contribution
5. The 401(k) plan can be rolled over to your next employer also
4. Think about ETF and index funds Consider ETF and index funds: It is never too late to begin with the right asset allocation. Index ETFs and funds add diversity, are affordable, and assure decent growth. Adding dividend stocks can bring momentum in your portfolio. Having dividend reinvestment plans is advisable as they can boost the gains as they are compounded. Seek help from an expert financial professional before you take any decision. It is best to know what investment options are appropriate in your situation as it can surely make the retirement planning easier.
5. Pay off the mortgage: If you also dream to retire early, then one thing you need to ensure is that you get rid of the mortgage as soon as possible and have home as your asset. Isn't it a great satisfaction to know that you own a property to face uncertainties. Tax on the mortgage is deductible which is a great motivation. If you want to reduce the maintenance cost and add to you retirement fund, you can even sell your existing home and move into a smaller or a less popular area.
6. Tax saving strategies: Different retirement saving options have different tax rules. For example, you are allowed to make a withdrawal from your IRA, but be prepared to pay some taxes on it, whereas, the Roth IRA does not allow you to make tax deductions.
7. Lifestyle: To lead after retirement life comfortably, you need to compromise on your lifestyle, right from the beginning. If you plan to travel a lot after retirement, make sure you set aside a decent amount of money to fulfill your dream. Similarly, if you foresee a lot of health related expenditures, then you need to invest in such a way that makes withdrawal easy.
With these tips you can enjoy a comfortable and easy retirement life.