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Things Retirees Would Do Over If They Could

by Paul-Martin Foss

It’s always better to learn from other people’s mistakes rather than learning from your own mistakes. That pertains to retirement planning as well, where making a mistake can end up being very costly. Here are some things that retirees wish they had known and planned for before they retired.

Figure Out Your Tax Burden

Only two things are certain in retirement: you’ll eventually die, and you’ll always have to pay taxes. If you have to pay a lot in taxes, it’s probably because you’ve saved a lot of money, so that’s (maybe) a good thing. But you still want to try to minimize your tax burden. One of the big things you’ll have to worry about is the impact of required minimum distributions (RMDs) on your tax burden.

Remember that RMDs kick in in the year in which you turn 70½. Those RMDs might boost your taxable income into a higher tax bracket, eroding the money you worked so hard to save. One possible option is to invest in Roth retirement assets, which are funded with post-tax dollars but incur no additional taxes later on and face no RMDs during the lifetime of the owner.

Plan for the Unexpected

Many retirees wish they had saved more before they retired. It’s easy when you’re making a nice salary to adjust your spending upwards and start living lavishly. But those high-earning days won’t last forever. Keeping your spending in check while you work and maximizing your savings will ensure that you can live comfortably in retirement. You never know what kind of health condition you might develop in old age, or what kind of financial crisis might occur that will affect your savings.

Delay Social Security

The temptation for many workers is to start taking their Social Security benefits as soon as they’re eligible for them. But if you don’t need them immediately, if you have a job or a pension or savings you can rely on, delaying Social Security benefits for a few years can make a big impact. You can start drawing on Social Security at age 62, but you won’t receive the entirety of your benefits, and that lasts for the duration of the time you receive Social Security.

Full Social Security benefits don’t start until age 66. Every month you delay after age 66 increases your benefits, until age 70, at which point you receive 132% of your Social Security benefits for the remainder of your lifetime. The bottom line is, the longer you can live without Social Security, the more money you will receive from the program.

Think Long-Term

Retirement planning should always be focused on the long term. That’s the only way to ensure a comfortable retirement. Don’t let short-term issues derail your planning. Your retirement is dependent on how much you’re able to save while you work, so stick to that focus and ignore temptations to ease up on your saving, even if just for a little bit. Future you will be very grateful.

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