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10 Steps to a Richer Retirement

| August 13, 2015
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10 Steps to a Richer Retirement

By Greg Middendorf CFP® CCPS® |  Certified College Planning Specialist | Retirement Planning 

You've worked hard all your life to earn a living, support your family, put your kids through school and save for your golden years. Here are some tips to make sure your money lasts as long as you do!

1. Determine Your Sustainable Withdrawal Rate

Depending on your age, you can typically spend about 4% of your portfolio in the first years of retirement. As a general rule, the longer your life expectancy, the lower your initial withdrawal rate should be. Review these calculations periodically to stay on track. Read here about systematic withdraws in retirement.

2. Build a Bond Ladder for Steady Income

This time-tested strategy helps smooth your income regardless of what happens to the stock market or interest rates.

3. Dividend-Paying Stocks Can Pay Off

Rising dividends can help you keep up with inflation, provide a reliable source of growing income, and cushion market downturns. A Primer on Dividends.

4. Take Advantage of Different Tax Environments

Remember that investments are taxed differently, depending on where they are held. Most capital gains and dividends get preferred treatment in taxable accounts, while most interest is taxed at your highest marginal rate. Find out if there is an advantage to using separate strategies for different types of accounts, such as IRAs, 401(k)s, and taxable accounts.

5. Get Unbiased Help from a Financial Advisor

Pick a fee-only financial advisor who does not accept commissions from product sales.

6. Review Your Designated Beneficiaries

Make sure you have the correct beneficiaries on your IRAs, 401(k)s, insurance policies, and other retirement savings plans. You may need to update your beneficiary designations.

7. Understand Your Social Security Options

One of the most important and difficult decisions you will have to make as you approach retirement is when to start taking Social Security benefits. There are many factors to consider, and the decision can be quite complex. Many people leave thousands of dollars on the table by claiming too soon or not coordinating benefit strategies with their spouse. Be sure to consult a professional financial advisor regarding your specific situation.

8. Make the Most of Your IRA and 401(k)

Contributing the maximum to your IRA and 401(k) is a great way to reach your goal of a financially independent retirement. The contribution limits are often adjusted for inflation, so the maximum amounts may change each year. In addition, if you are over 50, you can deposit extra dollars, called catch-up contributions, into IRA and 401(k) accounts. For 2016 contribution limits, download this handy chart. Consult your tax or financial advisor for the current limits.

9. Protect Your Savings with Long-Term Care Insurance

With health care and nursing home costs increasing, consider buying long-term care insurance to provide protection from a catastrophic event that could derail your retirement.

10. Keep Estate Planning Up to Date

You should think through your estate plan, even if you will not owe estate taxes. Estate planning documents can help if you become sick or incapacitated. They also guarantee that your estate will be settled efficiently and according to your wishes. Here is a list of critical estate planning documents you should have in place.

Contributed by Greg Middendorf CFP® CCPS® |  Certified College Planning Specialist | Retirement Planning www.hengeholdcapital.com

Content in this article is not intended to be financial advice. Instead, we think of it as educational and financial education is important to us.

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