If you’re getting ready to retire, you’ll want to make several financial decisions before your last day. How should you invest your savings? What will healthcare cost? When should you claim Social Security? Your decisions about retirement account withdrawals, charitable giving, and Roth conversions could affect how much you keep over the years.
When you retire, your investment portfolio’s job changes. While you’re working, you’re focused on growth and building your savings for the future. Once you retire, those investments also need to help support your spending year after year. Your retirement investment strategy should account for that shift.
Retirement is supposed to be cheaper, right? No commute, no office wardrobe, and you’re no longer setting aside part of every paycheck for retirement. But your expenses don’t necessarily go down when you retire. In many cases, they shift. Some of the costs you already have stick around, while others can become more expensive as you get older. Here are five hidden retirement costs that can take a bigger bite out of your savings than you may expect, along with some ways to plan for them.
When you retire, you may have money spread across several different types of accounts. The account you choose to spend from can change how much you pay in taxes. A good retirement withdrawal strategy considers how each source of income is taxed and how they stack up against one another. To see how this works, we’re going to follow one couple through retirement. We’ll start with income from their taxable investment account, then add capital gains, a pension, IRA withdrawals, Roth conversions, and Social Security to see how each affects their tax picture.
Most couples plan for Social Security based on their own lifespans. What age should I file? When do I break even? How much will I get each month? But when one spouse passes away, Social Security planning doesn’t stop. The surviving spouse may still rely on those benefits for the rest of their life. Let’s look at who is eligible for Social Security survivor benefits, how much you can receive, when to claim, how survivor benefits work with your own Social Security benefit, and the mistakes that could cost you money over your lifetime.
Many people think their biggest tax challenge happens during their working years. That’s not always the case. Retirement comes with its own set of tax rules and tax strategies. The good news is that several retirement tax strategies can help you keep more of your money and potentially reduce your lifetime tax bill. Let’s walk through eight strategies that can help you pay less tax in retirement.
Do you need a WILL, a TRUST, or both? A lot of people think a trust is something you set up to save on taxes or protect your assets from creditors or lawsuits. While some trusts are designed for those purposes, that’s not why most families create one. For the vast majority of people, a trust isn’t about taxes or lawsuits at all. It’s about making things easier for your loved ones after you’re gone. The truth is, everyone needs a will. Not everyone needs a trust. Understanding the difference can help you decide what’s right for your family.
The numbers are in for the new Social Security Cost-of-Living Adjustment (COLA). It might seem like beneficiaries are getting a raise, but the increase may not feel as significant as many retirees expected. That’s because your Social Security COLA isn’t the only thing affecting the amount that actually lands in your bank account each month. Rising Medicare Part B premiums can offset a portion of that increase, leaving many retirees with a much smaller bump in their monthly checks.
Here is a closer look at how the Social Security cost-of-living adjustment is calculated, why Medicare premiums matter, and whether today’s inflation measure accurately reflects what retirees are really experiencing.
Deciding when to claim Social Security is one of the biggest retirement decisions you’ll make. Most people are told to wait as long as possible before claiming Social Security. In fact, delaying benefits until age 70 is often considered the default retirement strategy. But what if that’s actually the wrong move? For millions of retirees, especially married couples, waiting isn’t always the best option.
Even small retirement mistakes can quietly cost you thousands. Many retirees spend decades preparing financially, only to discover that retirement planning is about much more than reaching a certain account balance. Your investments, taxes, healthcare costs, spending habits, and withdrawal strategy all work together. Here are six retirement mistakes that can quietly derail a financial plan and what you can do to avoid them.