Safeguarding Your Financial Future

Here are a few questions you’ll need to answer to figure out when you’ll be able to retire.

There are a few things to consider, and not all of this money will have to come from your savings. When it comes to finding your retirement “number,” it’s vital to remember that it’s not about deciding on a specified amount of savings. A $1 million nest egg, for example, is the most typical retirement goal among Americans.

The main consideration in estimating how much money you’ll need to retire is whether you’ll be able to generate enough income to maintain your preferred standard of living once you retire. Will a $1 million savings account provide you with enough income indefinitely? Perhaps, but perhaps not. That is what we will assist you in determining at Benefits Plus Financial

During retirement, Medicare will not cover all of your medical expenses, and it will not cover most long-term care needs. Some situations to keep in mind is aging in place and will one need house improvements they hadn’t anticipated. Will your retirement income be slashed by taxes, and having the financial freedom to set money aside for a future car? Is it possible that elderly relatives will require your assistance?

If your spouse dies, IRAs, 401(k)s, and estate taxes are all handled differently.

Survivor benefits from Social Security might vary greatly based on the beneficiaries and their marital status.

Investing in a Roth individual retirement account is one approach to potentially reduce taxes (Roth IRA). You contribute after-tax cash to a Roth IRA and can withdraw any earnings tax-free in retirement. Traditional IRA payments, on the other hand, are normally tax deductible, and the money grows tax-free, but you must pay taxes when you withdraw the money in retirement.

To prevent this, many investors opt for a Roth IRA conversion, which involves transferring funds from a standard IRA to a Roth IRA. The method is sometimes known as a backdoor Roth IRA because it permits investors who would otherwise be disqualified for a Roth to open one. Some key points to keep in mind are one can convert a traditional IRA to a Roth IRA via a Roth individual retirement account (Roth IRA) conversion. Secondly, Backdoor Roth IRAs are also known as Roth IRA conversions and with a Roth IRA, there is no tax reduction up front, but contributions and returns grow tax-free. Also, any amount you convert will be subject to tax, which could be significant.

Under previous law, retirees had to begin taking required minimum distributions (RMDs) at age 72. SECURE 2.0, Section 107, increases the required minimum distribution age to 73, beginning on Jan. 1, 2023, and to 75, beginning in 2033. Specifically, the RMD age increased to 73 for individuals who turned 72 after Dec. 31, 2022, or who will turn 72 before Jan. 1, 2033. It will increase to 75 for individuals turning 74 after Dec. 31, 2032 (view source).

Over the years, financial gurus have advised people to save $1 million — a figure that has lately risen to $2 million due to changes in the cost of living and age demographics. Some experts recommend saving 80 percent to 90 percent of your yearly pre-retirement income or saving 12 times your pre-retirement wage. Those figures and formulas can serve as a guide, but they’re not set-in stone; each person’s situation is unique.

Perhaps you want to pay off your mortgage, assist your grandchildren with college costs, visit your ten favorite national parks, or begin a new pastime you didn’t have time for during your working years. It’s easier to plan for retirement if you can visualize what you want it to look like.