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: One sure shot way to make your after retirement life easier is by maximizing your savings. 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. Claiming Social Security: Do you know that Social Security statements are available online since 2012 and already 1 million people have downloaded it. 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: If your company offers 401 (K) and you are not contributing, this is a serious mistake. 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 a way this is free money. As a best practice, boost the retirement account contribution to the maximum of your capacity. If you are maximizing the 401(k) contribution, it is best to open an IRA to make extra tax-advantage contribution.
Some advantages of the 401(k) plan:
1. Reduced taxable income
2. Free contribution from employer
3. Assured retirement savings
4. Inflation adjusted contribution
5. Can be taken over by the new employer also
4. Think about ETF and index funds Consider ETF and index funds: You can always think about starting with the appropriate 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 paid on your mortgage, is deductible. 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 instance, you can make withdrawals from the IRA but you need to pay taxes on the other hand, for Roth IRA there are no tax deductions, you can withdraw without penalties.
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. In case you feel there will be too many health related issues, it is suggested to buy a good medical cover.
These little tips will help you lead a comfortable and hassle free retirement life.