5 Things Every Senior Should Know About Retirement
|5 Things Every Senior Should Know About Retirement|
Your retirement might not look much like your parents' and it will certainly be substantially different from your children's retirement. Here's what you need to know before you take the plunge.
Tax Breaks Matter
When your boss or the government gives you a break or assistance investing, take advantage of it! Investing your pre-tax income can reduce your taxable income, giving you more room to save. And when your employer offers to match your contributions to a retirement account, you're getting free money, so max out those contributions. It might hurt a bit now, but it's better than struggling through decades of retirement.
Don't Count on Social Security
If you plan to continue working part-time after retirement, your Social Security payments could be reduced. The rules governing these reductions are complex, but you should speak with a retirement coordinator or financial planner before taking the part-time work plunge. In some cases, you might be better reducing your part-time load, or even drawing full social security without working at all, but it all depends on how much in benefits you stand to lose.
Reverse Mortgages Can Help
Once you are over the age of 62 and own your own home, you could be eligible for a reverse mortgage. This senior-exclusive option allows you to tap into your home's equity to get a lump sum or receive supplemental monthly pay.
Your Debt Will Cost You
Debt—particularly credit card debt—almost always carries a higher interest rate than even the best investments. If you take on debt to finance expenses in retirement, or if you don't pay off your debts before you retire, you could end up spending more money than you make investing. Generally speaking, it's a better idea to work for another year or two to pay off debt than it is to retire early, even if you have plenty of savings. After all, if you have lots of savings, then you should have enough to put toward your debt—otherwise you're simply not ready.
Don't Forget About Inflation
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