Nine Tips to Help for a Longer Retirement
By Saghir Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live in security and dignity and fulfill their religious and moral obligations towards charitable activities)
Longer life spans and higher living costs bring new challenges for having enough retirement income to live the desired lifestyle that Baby Boomers may be seeking in their retirement years.
The good news of 60% of those surveyed are confident they will be able to cover their expenses in retirement. However, approximately 40% will either need to work longer to meet retirement expenses or lower their cost of living. Worker should plan to save for at least 15 to 20 years of retirement expenses. With that in mind, consider these nine tips to help generate income, manage expenses, and make money last in retirement.
Generating income
- Consider part-time and self-employment.
Some Baby Boomers are turning to part-time or full-time jobs or starting their own business. Most entrepreneurs in the US today are of 50s and 60s launch new business at nearly twice the rate as those in their 20s.
- Revisit your asset allocation:
Historically, older investors have tended towards fixed income and reduced volatility. However, due to low interest rates and working longer, you may want to maintain a higher allocation to equities during your retirement, depending on your risk tolerance.
- Consider your home as an income –generation.
Online services can make it easier for you to earn income from renting out an extra room, epically if you reside in a tourist spot.
Managing your expenses
- Consider moving to a lower-cost state or country.
Choose a location with a lower income tax rate or cost of living –perhaps a favorite vocation spot here or abroad. The number of retries relocating aboard is below by 17 %
Between 2010 and 2015.
- Control health care costs.
Taking health insurance coverage through work can help you manage healthcare costs. In a recent survey, nearly half of the companies offered full and part- employees the same health insurance coverage letter, along with other benefits.
Recent tax law changes may have affected your tax obligations. Check with your legal or tax professional before taking any action that may involve tax consequences.
Making your money last.
- Have a plan for taking Social Security.
Understand your Social Security calming options. Full retirement age is generally 66 (if you were born between 1943& 1953) or 67 (if you were born in or after 1960). Reduce benefits can begin at age 62. Currently, benefits increase 8% per year if you delay your retirement age until age 70.
- Consider delaying retirement account distributions.
Delaying distribution can help your saving last longer. For most accounts, you must begin taking required minimum distributions at age 70½ (Roth IRAs are an exception)
- Insurance produced may hedge against longevity risk.
Both immediate and differed annuities can offer tax-deferred growth and guaranteed income. However, such guarantees are subject to the claims-paying ability of the insurance company. Consult your financial advisor and tax professional for advice pertaining to your financial situation.
Finally, no matter how old you are, reaching your retirement goals means planning for them now. It’s important to compare the costs associated with the lifestyle you imagine to the income you expect from all sources during retirement. Talk with your advisor about how you can create or adjust a plan to help you achieve your goals.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)
-----------------------------------------------------------------------------
