Preparing for retirement income is more than maxing out 401(k) contributions and calculating social security. Regardless of how close you are to retirement, knowing the following 5 tips will help maximize your money for when you stop or reduce your level of work.
- Pay off debt. The money you currently spend for debt service could be used for adding to retirement savings. Mortgage interest is deductible on your income tax return, but be sure debt is the right choice for you financially and emotionally.
- Save as much as possible for retirement. This point is obvious, yet most people don’t save enough. Having multiple income streams is a great way to boost income, and thus, savings. Consider the following options: set aside bonuses instead of spending them, buy rental property, start a side business, or do contract work that isn’t a conflict with your current employer.
- Do an annual ‘checkup’ on your financial situation. With a financial advisor, evaluate where you are and where you need to be for retirement savings. Make adjustments to keep up with your goals.
- Work with an advisor you trust. A person who specializes in generating income from financial instruments offers a valuable perspective. For example, some investors bail out when the stock market goes into erratic swings. Seek advice from and investment advisor who sees the bigger long-term picture and has your best interest in mind.
- Understand Medicare options. Medicare won’t cover all of your health care expenses. Before you retire, understand that you will need additional savings to cover medical expenses which take up a greater percentage of cash flow as people age. Approaching or after retirement, talk with a knowledgeable insurance representative to know your options and explore supplemental insurance to minimize out-of-pocket costs. Many people who are healthy choose a lower level of Medicare coverage, and then have a surprise when health issues arise that aren’t covered.
Talk with a Salmon Sims Thomas advisor about strategies that can help you preserve income.