#5 Sit with a Retirement specialist and make a plan.
Sit down and make a retirement plan. Typically, the average American family spends more time during life planning vacations than for retirement. This is one of the most important decisions of your life. Give it the time to sit down with a trained professional and make a solid plan and stick with it. They can go over all options and scenarios with you as well as products that may be able to save you taxes and time in the years ahead.
#4 Don’t borrow from your 401k or retirement funds.
You’ve made a solid plan, now STICK TO IT! Many people borrow on their 401k and then owe penalties. For instance, you could be stuck at your job because you’d have to pay back the entire 401k loan immediately if you leave your job. Or if you’re forced to leave your company and cannot pay back the loan in full, you may have to pay up to 40% in taxes, depending on the local rates. You’ll be double-taxed on any money you borrow from your 401k because you’ll repay the loan with after-tax dollars and will be taxed again on the money you took out.
#3. Don’t pull from Social Security to Early.
Do not take Social Security payments to early. According to Bankrate.com Social Security grows 8% a year if you delay pulling at age 65. So the longer funds can wait to be pulled from here, the better. We know you earned this money and put it in literally your entire life, but if you have other means, use it. 8% per year is 8% per year.
#2. Set a Retirement Budget different than your current one.
Many forget to realize that in retirement, you will not have the income level you did while working. And while you made a plan, saved, and did what you needed to do to retire, it’s never the same. Make sure you understand your expenses and put them into 3 main categories, Essential, Important, and Discretionary Expenses. You may have to cut back on a few luxuries that you enjoyed while in the workforce.
#1. Plan to save Extra for Unexpected Medical Expenses.
Some figures have put senior medical care needs at over $350k in retirement years to cover everything. Remember some things Medicare, unfortunately, will not cover. Also start now and consider pre-tax health savings accounts like the ones we have listed in our resources section. Follow these above steps and it’s should be smooth sailing in retirement for you and your loved ones.
So many retire only to find out they don’t have enough. Or worse they run out. These are the 5 steps on how not to go broke in retirement.