SPRINGFIELD, Mo. – Retirees across the country are putting retirement plans on hold due to soaring inflation and uncertainty in the stock market.
Whether you plan to retire tomorrow or 20 years from now, local financial professional Brad Pistole from Trinity Insurance & Financial Services has a few tips to help you retire on time.
Maximize Your Contributions
- Start by maxing out your retirement accounts. In 2022, you can contribute up to $20,500 to your 401(k).
- For those over age 50, catch-up contributions allow you to contribute an additional $6,500.
- While the past few months have been pretty volatile on Wall Street, don’t be afraid to invest.
- Make sure your investments are diversified and have appropriate risk for your age and how close you are to retirement.
- Investing in a diversified portfolio, where your money is spread into different types of investments, can help you ride out the extreme highs and lows of the market and stay the course.
Strategize With Social Security
- Social Security is a major source of income for retirees. It can make up nearly half of a retiree’s income, but it’s important to know when you can start collecting and how to factor that income into your overall plan.
- At age 62, you can start to claim Social Security, but your benefit will be permanently reduced if you claim them before your full retirement age.
- If you turn 62 in 2022, your full retirement age is 67. That’s the age at which you can claim Social Security benefits and receive your full amount.
- Every year you defer, your benefits will see an 8% automatic increase, so waiting to claim can help you maximize your income.
- If you aren’t sure what your full retirement age is, it is based on the year you were born.
Leverage Mid-Year Roth Conversions
- Consider converting your tax-deferred accounts, like traditional IRAs and 401(k)s, to tax-free accounts like a Roth IRA. During a market downturn like we’re experiencing, the process is less expensive.
- You will pay taxes on the money you convert, but you can withdraw that money tax-free and your money grows tax-free.
- Another benefit of a Roth account: There are no required minimum distributions in retirement.
- To learn more about Roth conversions and if it is right for you, talk with your financial professional.
Plan For Long-Term Care
- An estimated 70% of people over the age of 65 will need some form of long-term care later in life.
- Failing to save enough to account for the cost of long-term care can quickly eat up your retirement savings.
- Long-term care insurance helps cover the costs of nursing home care and home-health care later in life. It can also help families pay for chronic medical conditions like Alzheimer’s or dementia.
- Investigate your options and decide whether a traditional or hybrid policy makes sense. Traditional long-term care insurance policies typically come with annual premiums for life, while hybrid policies may allow you to draw down or accelerate the death benefit amount. Another option is a long-term care annuity.
- To create a retirement plan that includes income and tax planning, Social Security strategies and long-term care and estate plans, talk with a financial professional.