How to Prepare for Retirement Right Now - Slimmer Payments

How to Prepare for Retirement Right Now

Preparing For Retirement

Are you close to retirement? If you are only a few years or months away, here are four moves the financial experts say you need to make right now to prepare for retirement.

1. Put More in Your IRA or 401(k)

Social Security may provide a substantial chunk of income for you during your later years. But you will still need savings of your own to subsidize those benefits. That’s why it pays to sneak a little extra money into your IRA or 401(k) plan while you can. If you’re over 50, you can contribute up to $7,000 to an IRA this year or up to $26,000 to a 401(k).

2. Max Out Your HSA

Healthcare could end up being your most significant expense in retirement. If you’re eligible to participate in an HSA this year, aim to max it out. If you’re funding an HSA on your own behalf, you can contribute up to $3,600 this year. You get a $1,000 catch-up as long as you’re at least 55. If you’re saving in an HSA on behalf of a family, your contribution for the year maxes out at $7,200, plus that $1,000 catch-up, assuming you’re old enough to qualify for it.

3. Reevaluate Your Asset Allocations

Your IRA and 401(k) should continue to generate growth for you in retirement without exposing you to too much risk. Before you retire, take a look at how your investments are allocated and make sure they’re appropriate given your age and upcoming plans. If you’re on the cusp of leaving the workforce, you may want to limit yourself to having 60% of your portfolio in stocks, especially if you intend to immediately start withdrawing from your retirement plan once your paycheck disappears.

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4. Figure Out If Relocation Should be Part of Your Retirement Plans

The state you choose to retire to will have a huge impact on your finances. Narrow down your choices before you leave the workforce for good. Some states tax Social Security benefits, while others tax income like retirement plan withdrawals. Then there’s the cost of living to consider. If you’re not where you’d like to be savings-wise, you may want to look at moving someplace where housing and goods and services are cheaper.

The closer you are to leaving the workforce, the more important it is to take these steps to help you prepare for retirement now.

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